Thursday, July 14, 2011

The Singapore Millionaires

I'm a couple of days late on the story about how 15 percent of all Singaporeans are millionaires. A quick skim suggests that just about everything that might have been blogged has been blogged on the topic. Still, I yield to the temptation to serve as an aggregator/polisher of what has gone before.

For starters: the press report I quote says, more precisely, that "over 15 percent of all households in Singapore have over a million dollars in assets under management." Sic, households? It is perhaps not so surprising that a "household" of (say) two full-time employed investment bankers has tucked away more than a million? And sic, "assets under management," so we are excluding personal residences?

Second point: we're all millionaires now. Okay, not all. But if you present-value the likely payment streams from Medicare, Social Security, various other pension sources, an an awful lot of UB readers would have balance sheet assets somewhat north of a million (MR has a good thread on this).

Three: a million ain't a million any more. Suppose you're 65 with a life expectancy of 20 years. You want to draw $50k a year. Even ignoring interest (and inflation protection, and dependent/survivor protection)--there's a million right there. Grant that $50k is better than sleeping in a cardboard box, still it is not what lots of middle class strivers hope for and dream of. And come to think of it, if you are in high-rent places like, well, Singapore, maybe you are living in a cardboard box.

Four, "havens." The United States comes seventh on the list of millionaire countries, with only 4.5 percent. But as many have noted, every one of those higher on the list is, in some sense a "haven" country, at once insulated and deeply involved with its neighbors and the rest of the world--one way or another, an EntrepĂ´t.   Compare, say, Manhattan or San Francisco (or Shanghai)  and you might get numbers a lot  more like Singapore.  The question then arises: are Manhattan/Singapore to be understood as ripping off their hinterland?  Or is the hinterland to be understood as dragging down the leaders?

There a lot of potential complications in the "havens" story, of course: Taxmom ragged me a while back about the Viking raiders--suggesting that socialism can survive as long as it has capitalist neighbors to sponge off of.   And merely having "neighbors" doesn't say much.  Switzerland may thrive because it is surrounded by healthy and prosperous trading partners.  But to be landlocked among hostile neighbors--think Uzbekistan or Chad--now, that is a real misfortune (Paul Collier develops this last point).

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