♪ >> from our studios in new york city, this is "charlie rose."

charlie: do you care that they say, lee kuan yew has created a miracle in singapore but he is authoritarian, he doesn't care about democracy? he cares little about free press? doesn't care? that he knows what is right for singapore, what is right for the people, and that he is going to see it the way he believes it ought to be come hell or high water? lee kuan yew: let's put it in a more objective way. i have to govern now, 4 million people. 3 million are singaporeans, one million are foreigners. who get jobs in singapore. and of that one million, 100,000

are professionals. why do they come? because it is a thriving economy that gives them jobs, and their families are happy and safe. no drugs, no muggings, no rapings. you can walk the streets at 3:00 in the morning and you are ok. how was it achieved? you won't see any policeman. you won't see soldiers lining the streets. every four years to five years i had three new might mandate as a free election. there are about five or six different parties that will spring to life one year before the elections and try their luck. and in the last few elections they devised a new strategy. they knew that people wanted a pap government, but wanted opposition. so they say, right, on nomination day we will contest , less than half.

so the php has already formed the government. and it worked. and they want forth seats. -- four seats. but what was the concessions they made, that the people wanted a php government. so why should i be authoritarian when i have the people with me? that is what the people wanted. they wanted a high quality of life, low crime rate, a good future for the education of their children, and jobs. better homes, better hospitals and a higher quality of life culturally. charlie: did you have an internal belief in markets, that somehow you had been convinced that markets was the way to go and that competition would produce an economy that would be competitive? lee kuan yew: it wasn't that simple. by 1965, i had traveled all through the whole of africa, 17 countries. i went on a special mission.

i have traveled widely in asia and in europe. and in the region. i have been to indonesia, malaysia. and i have seen what did not work. first, leaders became soft. they promised the world, follow me. in fact, in ghana there was a statue of the leader, and he called it black star square. there was a statue and a plaque that said "seek ye the kingdom , of politics and all will be unto you." i thought, god, that is blasphemy, but never mind. but it wasn't. and it wasn't awfulness. you could see the thing wasn't working. it had all of the symbols, that square, marching troops. we had to feed 2 million people.

how? agriculture was negligible. commerce was coming to an end. industry was in its infancy. so, i had been to see hong kong, the nearest to us. but hong kong had a british government which assured military defense security, and stability. and british capital. and i had none of those. i thought taiwan, they had an american alliance. so somehow i had to get this thing going. so we tried many things. we brought kermit -- garment manufacturers from hong kong and

taiwan, textile mills, started our own glass factories with our own cash, when we did not have silicon to make those bottles. we sold it later. trial and error. finally, i spent one term at harvard. as what luck would have it that was the height of the cultural revolution in china. charlie: right, in the 60's. i met a undp expert. he came to see me one day. he said why are you looking worried? i said, i am enough spot. he said, imagine how much more difficult spot you would be if you had 100 million japanese as your neighbors instead of indonesians. [laughter] that set me thinking.

think what you can do or what they will do to you. charlie: provider market? lee kuan yew: no, take you over. so i said, there are 100 million arabs that refuse to train. they leapfrog. flowers, fruit, in winter to europe. many other things, but starting with very simple agriculture. in my term at harvard, i met many people economists those who taught me. charlie: economists? lee kuan yew: i also met many businessmen. and i decided we would leapfrog a different way. we would get these big american

multinationals to manufacture in singapore and reexport to the world. as luck would have it, the cultural revolution made them bypass taiwan, hong kong. they came to singapore. texas instruments, hewlett-packard, you name it. seagate became the biggest manufacturer of disk drives in 20 years. we were the center for disk drives. we never looked back. the other side of the coin, i came up with the idea that people would come here and explore the region. it is a dangerous region with pestilence, malaria, typhoid. here in singapore, we will create a first world oasis out of this island. it was a third world island.

we will create a first world condition. charlie: from first world to first? lee kuan yew: yes. so that they can base camp here and venture out. when they are sick they can come back. so we had first world standards of infrastructure, roads, airports, seaports communications, health schooling, personal and public security. later on, we added concepts, but the basic was first world. that was easy. the hardware. the difficult part was getting the population behaving like a third world to start behaving like the first world. charlie: that is what i want to know. how did you do that? lee kuan yew: people use to make fun of us because foreign correspondents used to watch us with this campaign.

they would say stop spitting, stop littering. i said let's do it differently. you can't do silly things like you did before because you want to be hosts to first world guests so you can't be peeing , all over the place. like you did in the old squatter villages. there were a few who were still troublesome. so we installed in the left, special instruments that would stop the moment you did that and we would apprehend them. [laughter] charlie: it's funny, but it worked. lee kuan yew: it was real. then they opened the lift door and peed from the outside in. [laughter] we installed a camera that would catch them from the outside.

so it went on. but it improved. i am not saying we are there but if you want tourism you have to have public toilets. and we did not have that. so we had to get a campaign saying flush it you stupid man. you oh it to the next cap -- chap. it took some doing. we are not there yet, but we are getting there. we still have people with mobile phones at concerts. charlie: what do you do to stop that? lee kuan yew: you catch all of them. charlie: you also have one of the highest rates of capital punishment. lee kuan yew: that is for drugs. charlie: because you think drugs deserve to be treated with the maximum punishment. lee kuan yew: if we could kill them a hundred times, we would. because you destroy whole families. it is terrifying to see. you are drug dependent, you

steal, cheat, rob your parents. it is so destroying. they come in knowing death is there found. but the rewards are so great. and they try -- very unusual people, women from africa come to sell close, and in between the clothing were kilos of herion. charlie: you say that if you bring heroin into singapore, you hang? lee kuan yew: you hang. anything beyond 10 grams, you hang. charlie: if you are convicted of bringing in more than 10 grams of heroin, you hang. after a jury trial? lee kuan yew: no jury, judge. a judge listens to the evidence. and if you are guilty, you hang.

lee kuan yew: yes. and they still come. unbelievable. charlie: do you believe capital punishment is a deterrent? lee kuan yew: without capital punishment, our transit rate would quadruple. and our internal consumption would go up by a multiple of 10. charlie: do you believe in the idea of a free press? lee kuan yew: i believe in the truth. charlie: that is different isn't it? lee kuan yew: i don't believe in putting a spin on things. i think they should print the story and editorialize separately. and not skew it with headlines and sub headlines putting it in the inside pages. charlie: do you believe if someone said singapore, this modern city state that pretty , much escaped most of the asian economic crisis that plagued

japan, thailand, indonesia malaysia. you were relatively, compared to them immune. , lee kuan yew: yes, not immune but our damage was collateral. we would lend the money. and when money was pulled out of the region, they pulled it out of singapore as well. charlie: you seem to believe not in the individual, but in the state. you seem to be much more of a statist than someone who is such a fan of free markets. lee kuan yew: there is a profound difference in the core philosophy between the american and the chinese. and it is a reflection of your history. you came over on the mayflower, you were seeking religious

freedom, so much so that you you refused it to be allowed to be taught in schools. you believed in the individual as the creator of all things and you captured the wild west. on horseback, main street, you be mayor and i am sheriff. we built a goldrush town. or cattle or whatever it is. you have been immensely fortunate and successful. to world wars left europe in shambles and you emerged undamaged and technological and industrial power. china has a completely different checkered history.

4000-5000 years of up and down. long eras where there was no government, anarchy. warlords. i once had a chinese masseur and we were talking. i said, during the war what , crazy did you use? japanese currency. it was in japanese controlled areas or other areas. i said, how many currencies are there? two or three? he said, 14 or 15. depending on which warlord's area you are in. why have they survived in spite of anarchy and disaster, floods, famines? because there was a social network independent of government. it sustained them. the immediate family, the extended family, the clan. you owed them in obligation. you cannot turn them away. that is how they survived.

i would be loath to believe that in singapore you will never have anarchy. that there will always be government that will provide for social security. that has been your experience. i'm not sure that will be singapore's experience. i think we are safer if we keep those family bonds, those traditional liferaft systems not dependent on the state. which places the emphasis on family, extended family, and then the government. and not the individual at the expense of the family and state, which is the american system. so you have bill gates, forbes or fortune, 58 of the best and the brightest and wealthiest. that is your experience. that is not china's experience. that is not our experience.

yes, we also want to try and get our bill gates going. but, in the context of keeping our society solid so that we will survive as a people. you have never been occupied. you have only had one civil war. quaint the traumatic experience. so you will never understand what it is. i have been occupied by the japanese. it did not represent me. there was no human rights. the first thing i saw two days after they came in when i went out to buy some food, two human heads on a pole outside the tallest building in singapore, and chinese characters that said

if you are not well behaved you , will end up here. i thought to myself, if i only had this camera. here was a modern building, i was in singapore then, and this medieval scene. so the japanese never talk of human rights. because they understand that brutality and cruelty they inflicted on fellow asians who they came to so-called liberate these are realities. , why did they succeed? not because of individual japanese hair was in but because as a group they were a powerful force and they still are. charlie: you in fact believe that it is not impossible that they may once again be a powerful military force with

ambitions that could lead them to war? lee kuan yew: i wouldn't say exactly with ambitions, but i am quite convinced they can become a very powerful military force. and if cornered again the way they were in 1941 with an oil embargo and no exports, rather than curl up and die they will fight. it is in the nature of the culture of the people. they are not people who will lie down, carla, face the wall. charlie: would you fear the japanese more than the chinese? lee kuan yew: with americans around, i fear neither. charlie: why? lee kuan yew: because i think there is a balance. the united states together with japan will be able to balance china. charlie: and that is the way see the future, a strategic balance between united states and japan and then china. lee kuan yew: absolutely.

i don't think the japanese would be wise to go it alone. and they know it. i don't think the united states alone can take china and japan. charlie: japan and china, it would be culturally unlikely to happen. lee kuan yew: very. charlie: what do you regret most , so far? lee kuan yew: it is a parlor game really. so many things to regret. but what i regret most is the years we spent building up the momentum from malaysia and breaking it off in less than two years. it never got a chance. if there was a stronger prime minister in malaysia, who was prepared to give a more equal balance to people in malaysia, the story might have ended differently. and it would have been better for all of us. charlie: because singapore

combined with malaysia and all of that meant a much more powerful point of leverage. lee kuan yew: not for me, but for the people. they would have had a better life. ♪

♪ charlie: you and i had a conversation once about a whole range of leaders. you said to me that the man you most admired was xiaoping. he admired you too because he sent 30,000 chinese to singapore to figure out what you're doing am i right? lee kuan yew: yes. charlie: what were you doing that he wanted to see? lee kuan yew: he was astonished when he came for the first time in 1978. to tell us to prevent vietnam from invading cambodia because they were doing it on behalf of the russians. then he found a singapore which was contrary to what he was given in his brief. charlie: yes. lee kuan yew: he found a

prosperous, orderly society. everyone owning their own homes and with a job. he said, how did you get there? i said, we educated our people. and look at all these companies americans, japanese, europeans ,, they bring technology and train our people. we learn how to do things. and because we are cheaper after a while we became general managers, managing directors and we learned how to do that. we become suppliers to them. so he said, you made use of capitalism to build a more egalitarian society. everybody owns her home. i will do the same. charlie: and he did. lee kuan yew: he did. he went back and created 12 special economic zones. all the coastal cities.

and it succeeded. charlie: he was the greatest menu government, because he understood -- because the results? he change the nation, and therefore -- lee kuan yew: no, he is a member of the old guard. he chased the kmt out. charlie: he was a victim of the cultural revolution. lee kuan yew: yes. but he was realistic, he knew the system was not working. he knew that they were going to end up down in a deep hole. [laughter] and he decided against all of the advice of his fellow old guard. that we will change course. charlie: and he had the brains and power to pull it off. lee kuan yew: yes. and when they tried to stop him, he went down and said, learned from all of the countries in the world. most of all, learned from singapore. the order is good and they are a

very prosperous society. charlie: what is the most important change and significant change in your way of thinking about the world over the last 20 years? lee kuan yew: that the impossible can happen. i never thought that the soviet union would implode so easily. and i never thought that the chinese would abandon the communist system and move into the free market so readily. it was unthinkable 20 years ago. both has happened. the world has changed. charlie: and it is not clear exactly how it -- lee kuan yew: no, it is not exactly clear when it will

happen, but that it will happen now in the long-term, 50-hundred years, yes. charlie: and the center of gravity is shifting to asia. lee kuan yew: it must be because the population is there. the talent pool of 1.3 billion people, plus japanese and koreans, vietnamese and others. it can match europe and america. but that talent pool was inert did not have science and technology or did not care. but now, everything that you do, asia is doing. you go into stem cell research we go into stem cell research. they have to go into it in order to get into a field with where the chinese cannot compete. the chinese are in it in a very big way. they are watching you and whatever you do. they say, we will do that.

they charlie: they are enormously curious. lee kuan yew: not just curious but enormously ambitious to catch up. charlie: for good reasons and good ends? lee kuan yew: [laughter] that you must ask them. but i think they have a sense of frustration that they were down for so long. let's make it now. we have a chance. charlie: the united states has to encourage them? lee kuan yew: no you don't have to encourage them. they don't want to be an honorary member of the west. unlike russia. they are quite happy to be chinese and remain as such. when you tell them you ought to do this or that, they say yes, thank you. and in the back of their minds we have lasted 5000 years, have you?

charlie: is there a different chinese attitude about the future than the united states? lee kuan yew: they do not believe that works -- what works for them works for other people. we have special circumstances that allow this to work. i am not interested in changing regimes. i deal with you as you are whether you are a dictatorship or tribal leader or whatever. i maintain good relations. i need your resources. let's do business. there is no evangelistic urge to change things. charlie: is america a proselytizing country? they want to sell their values? lee kuan yew: [laughter] it always has been and always will be.

that everyone wants to become like america. which i don't think it can be, but they want to try than the ahead. charlie: some people look at china and say there has been no google, no facebook developed. no microsoft. and that says something about the educational system. lee kuan yew: harley, but partly because they are controlling. but -- they do not like the established order to be grand. -- threatened. to allow something to be borrowed and tested out. why take the risk? let's play it safe.

if you let 1.3 billion, then you will have chaos. they are capable of thinking of new things. i will give you an example. i go on the computer for translations now. and it is all done free. the chinese had done it. you can do wonders with it. you can do anything you want to do on the internet. there is no need to go to google. charlie: a chinese search engine -- and a large one. what did you think of what chinese did to google? lee kuan yew: they did not want google to become a vehicle for subversion.

what they called subversion. the spinning up ideas antithetical to the state. charlie: do you think they are paranoid? lee kuan yew: yes, the government is run that way. it is a huge country. and you cannot control everything. you cannot microcontrol it. charlie: let's talk about singapore. you agreed to sit down with seven or eight journalists, and said don't talk about it. and then they published a book. did you do that because you were worried young people did not understand singapore and you wanted to get to them? lee kuan yew: yes, i am worried

they believe we can go on autopilot. it is not possible. the basis is several hundred kilometers and we built a hundred story edifice. and you keep that base, you might be able to go up to 150. if you tinker around and believe it is forever, it might come crumbling down. remember, this base is narrow. margins for error are small. make sure when you reach a decision you have a fallback. charlie: some people say that singapore has crystallized the question, what price for

prosperity and security? lee kuan yew: yes. charlie: that is the question that you have. how have you done that? lee kuan yew: i answered that by making sure there is no instability. the different races mixed together peacefully. differing religions do not clash. disparate income groups mingled. there are no ghettos. i challenge you to find a ghetto. the division, other than superrich, they are all living

in one milieu. the most important is schooling and housing. that has been achieved. i have also had to put restrictions on people on the same race together. they gathered together. malaysians will get together indians will get to gather here it -- together. then we have a problem. so every block you have a quarter, and it reflects a percentage of the population of the many races. whether your neighbors are chinese or indian or malay, they go to the same schools.

it is a structure device, a social device and social structure that fosters you to understand the different races and makes you put this together. charlie: where did you get these political ideas of yours? lee kuan yew: after two or three riots. they were poor and dirty, no sanitation. charlie: this was before 65? you began to form an idea that you thought you would like to see singapore become before malaysia in 1965?

lee kuan yew: we hope to make malaysia the same. but they wanted a malaysian society. they have a serious problem because the chinese and indians -- they are separate. they live in different places and go to different schools. they have different communities. we have one community. i'm not saying we are one nation yet, but we are one society. charlie: and you have made speeches including this year promoting the idea of the kind of social cohesion of multiple parties from multiple ethnic groups? lee kuan yew: yes, without that you get no progress. if you are fighting, how can you get progress? charlie: but is -- do you worry

that if there is more political discourse among the young that it will lead to racial politics? lee kuan yew: no, they can have all the discourse they like. that race, religion, and language need to be tracked carefully. you know that these are sensitive issues. it is a hornets nest. i said in that book, that i think that muslims from malaysia should be relaxed. and he together with the others. charlie: and it created a firestorm. and your son, the prime minister, differed with you. who was right? lee kuan yew: [laughter] he has to be right because he is the prime minister. charlie: but? lee kuan yew: if you ask the

average person, then they would say, you're awesome. charlie: were you born in a well-to-do family? you went to cambridge to law school? did you then think you wanted to go into politics? lee kuan yew: yes, because i saw no reason why the british should run the place. i think given the chance we would do better because we knew the people that are then they went. charlie: you want to do be part of an anti-colonialist party. lee kuan yew: and we have done better than the british ever did. the british kept everyone segregated. from the time they built it up.

chinese live here, malaysians live here, arabs live here. in the 19th century, they were very disparate peoples. they segregated them. but i have got to make one society out of this people. they have got to understand each other even if they don't like each other. charlie: that is why you think it is fragile. lee kuan yew: yes, of course. it is not in their dna yet. it is enforced. by sheer living conditions. physical living conditions. and every day intermingling. same schools, same playing field, same shopping centers. same neighbors. charlie: when you were at

cambridge, you met and married your remarkable wife who died in october. she was a political partner of yours? she edited and listened and kept you with speeches? lee kuan yew: yes, she corrected me. charlie: and she raised the family as well. you described yourself as a kept man. lee kuan yew: which i was because she was earning more money than i did. charlie: as a lawyer. she was with you in 1965 when you actually cried on television. what were you crying about? lee kuan yew: i cried because an idea and ideal were shattered. that we would have a non-racial society in malaysia and singapore.

and we had already made moves and mobilize a large part of the population there. chinese, indians, and some malaysians. working for a malaysian malaysia. that was the end of our enterprise. charlie: you cried over the anguish that what might have been could not be? lee kuan yew: i had to leave behind all of the people that mobilized. charlie: did you dream it could be what it is today? lee kuan yew: not in the actual form it is, because the forms have been the physical landscape has been a result of technological improvements imported from outside.

as the globalization allowed us all of the rest of it. we have an intermingled population, one society. that was planned. that was the aim. it is still a work in progress but we should continue that work. charlie: someone said that he built a first-class oasis in a third world region, and you have been praised for your efficiency and incorruptibility, but you had been accused of limiting political freedom and intimidation. lee kuan yew: how can you intimidate through libel lawsuits? that is ridiculous. lawyers will tell you whether.

charlie: you are prepared to be litigious. lee kuan yew: yes, rather than have to knock him down politically i would go to court. cross-examine me. as the plaintiff i am saying that what you said was a pack of lies. here i am know. charlie: you have also said that while you might have done things that you should not have done, you always did them for the honorable reasons. lee kuan yew: looking back, i think i might have done better. charlie: like? lee kuan yew: like not forcing the pace of getting people to change their languages. charlie: you made english

language. lee kuan yew: yeah, we were speaking in multiple tongues. chinese speaking dialects, malaysians speaking three or four dialects. and english, a very bad form of english. charlie: this is why you were against what they call singlish? you still are, even though the code has their own language? lee kuan yew: you want a language which you can communicate with the world easily. if you speak your own patois you are disadvantaging yourself. i once went to jamaica for a commonwealth conference. and i will never forget this. they took over an american

holiday resort, so all of the cooks and so on were blacks. good cooks. they spoke in a quaint accent. so i went out to watch the fishermen bring their fish in. asked him, what kind of fish? i said what is that? and i said oh that fish. that was the result of an amalgamation of many african dialects. we inherited the english language from the british.

we decided to make it the working language. chinese, malay, indian, the second language. charlie: are you worried about the declining birthrate? lee kuan yew: our lifestyle has changed. we are educated and independent. they don't marry until mid 30's. they are late childbearing. charlie: it is my impression that you, because you have shown results, believe that the prime minister became senior minister mentor, knows best. feels strongest about what is good for singapore. and worries most about threats against it. lee kuan yew: yes. what is best for singapore, that they continue to thrive and prosper. and if you don't, and you have

migrants overwhelming the local population, we have not done that yet. migrants are 30%. and i think we should never allow them to become near 50%. then they will change us. charlie: what would you do to make sure it doesn't become 50%. how would you do that? immigration restrictions? lee kuan yew: yes, take in high-quality people. charlie: do you worried that singaporeans because of this prosperity -- are becoming a bit soft? lee kuan yew: no, not soft. they are becoming self-centered. they are hard-working and hard-driving, enjoying life and have a good time. they work hard and they play

hard. they are not going soft. charlie: you have said, with respect, that they don't feel the spur in their hide. lee kuan yew: that is because they don't think it is necessary to strive anymore. we are already here. we have arrived. charlie: so what is your message when they say that? lee kuan yew: this needs more than autopilot. you run three storms and air pockets. there is a pilot and copilot and a spare pilot that has to be on board. passengers need to be alive and awake and alert. charlie: i said -- since you are worried. lee kuan yew: i'm worried because if they are the new leader is, -- they do not

realize the small basis on which it was built and they take liberties with it. then we could go down quickly. spiral down a vicious circle. charlie: quickly. lee kuan yew: yes. status of living will go up, investments will disappear. charlie: your legacy is that you have presided over, encouraged lead this prosperity. you're developing legacy is you want to make sure that it is sustainable. lee kuan yew: i want to make sure that this place always comes out with confidence. commands confidence. confidence brings in investments and talent. with investments and towns, we will prosper. that confidence should never be done for diced -- jeopardized by commotion or strife.

not necessary. charlie: can singapore -- will singapore, and can it, do you want to see a true democracy? lee kuan yew: american-style? charlie: yes. lee kuan yew: no. charlie: what is an american democracy? you can't have that? lee kuan yew: no, religion and race and culture are forbidden bidding and sensitive. it causes a stir and big trouble. charlie: that is the price you pay for prosperity and security? lee kuan yew: no, those are no go areas. charlie: do you wish you would have a bigger fishbowl to

achieve your miracle in? this is a small island. lee kuan yew: it is very difficult to have a little piece of comfort. charlie: what is it that makes you this strategic thinker, that people come to for advice? lee kuan yew: i do not believe people come to me to seek advice, they come to me to bounce ideas and test them out. charlie: but what is it you have? lee kuan yew: experience. i'm 88. i have lived long. and i have not forgotten my mistakes.

♪

>> live from new york city, welcome to bloomberg west. cory johnson is at the facebook annual developers conference. first, want to give you a check of the bloomberg top headlines. stocks sold off for the third straight day with the nasdaq dropping the most 11 months. the semiconductor index had its worst drop in five question makers sold off, demand weakening for desktop computers. one company that had a huge day was kraft foods -- those shares soar after the company