A million millionaires

According to a study reported in the Financial Times, more than 15% of Singapore households are millionaires.  No other country comes close (#2 Switzerland has less than 10% millionaires.)  Singapore will soon have a million millionaires, out of a population totaling a mere 5 million.  I expect the number of Singaporean millionaires to rise sharply in the next few decades.  Recall that Singapore only recently became a very rich country (in income terms.)  Given its high saving rates, the younger generation will get to a million dollars much quicker than the older generation.  I’d guess that roughly half of Singaporeans in their 50s and 60s will be millionaires by 2040.  And the younger generation at that time will hope and expect to get there someday.

This will help Singapore politics in many ways.  Singapore is an authoritarian government that is gradually allowing more democracy.  In the recent election the opposition won about 40% of the vote, a new high.  By the time they are able to take power, there will be such a large and politically influential block of millionaires than no government will be able to enact big government policies that hurt stock values and reduced capital formation.  Nor will there be as much need for social insurance programs as in the West; most people will be able to take care of themselves.  There will be a virtuous circle of rising wealth leading to more pro-market policies, which leads to further increases in wealth. 

About 4.5% of US households are millionaires.  That number should be much higher, and would be higher with more pro-saving fiscal policies.  The relatively low ratio in the US helps explain many of our political problems.  The average 401k balance in America is pathetically low.  Many low saving Americans need social insurance; others are resentful of the rich and support anti-market policies.  Unless we are able change this dynamic we don’t have a bright future.


Tags:

 
 
 

37 Responses to “A million millionaires”

  1. Gravatar of JPIrving JPIrving
    12. July 2011 at 14:50

    I wonder what %age are outlanders like Jim Rogers. I know if I had lots of wealth I would look long and hard at Singapore even though it has dreadful weather.

  2. Gravatar of Charlie Charlie
    12. July 2011 at 15:12

    I don’t know, we don’t look that bad to me.

    1. Singapore
    2. Switzerland
    3. Qatar
    4. Hong Kong
    5. Kuwait
    6. UAE
    7. U.S.

    Most everybody ahead of us is either an oil rich Middle Eastern country or a city-state. It seems problematic to compare Singapore and Hong Kong to the U.S. as a whole. I’d be more curious to see how they compare to a comprable city like NYC.

    The big outlier is Switzerland. Why are there so many millionaires in Switzerland? Isn’t it kind of a tax haven?

  3. Gravatar of Lucas Lucas
    12. July 2011 at 15:15

    I wonder how one can reconcile the evidence (and rhetoric) of a free-market Singapore with the existence of :
    - Effective industrial policy and the low (or negative) growth in TFP, which we know is the ultimate driver of growth and living standards.
    - The huge restrictions on land development and housing.
    Also, I prefer Scandinavian egalitarianism to Singaporean individualism. I think there’s such a thing as an excess of meritocracy even as I think that of all the class divisions, a meritocratic society is the least bad.

  4. Gravatar of Lucas Lucas
    12. July 2011 at 15:23

    @Charlie,
    “Isn’t it kind of a tax haven?”
    All of them are. The oil rich states fund government with oil revenues. Singapore, Hong Kong and Switzerland are low-tax banking/financial centers with some manufacturing and trade thrown in. And the USA has the lowest tax burden of any big economy.

  5. Gravatar of Sanchit Kumar Sanchit Kumar
    12. July 2011 at 15:26

    How is it that Singapore has a larger proportion of millionaires to the United States, but its GDP per capita is only around $10,000 more (Singapore: $56,000 vs US: $47,000, pulled from IMF WEO database)?

    I was wondering if you (or a commentor) could show the mathematics of how that works… does it imply greater inequality in one area over another? Or maybe its logical for per capita GDP to be $10,000 greater in Singapore given the proportion of millionaire households in each country… I don’t know. Does anyone care to show me?

  6. Gravatar of OneEyedMan OneEyedMan
    12. July 2011 at 15:43

    Bush pushed the ownership society idea. Some blogger, I can’t recall who, pointed out that if you have compulsory savings and your asset markets take a major hit, you give a huge temptation to meddle to the political class. If the damages to the stock market from the recession were accompanied by proportionate reductions in social security income, the government response to the great recession would likely have been larger, clumsier, deeper, and longer lasting. If the saving is voluntary, I’d expect a smaller response.

    Still, we could put all that social security money into a TIPS account instead of a government run annuity. Then most workers would be hundred-thousandares when they retired.

  7. Gravatar of blacktrance blacktrance
    12. July 2011 at 15:49

    “Nor will there be as much need for social insurance programs as in the West; most people will be able to take care of themselves.  There will be a virtuous circle of rising wealth leading to more pro-market policies, which leads to further increases in wealth.”

    I think this view is far too optimistic. There is more to what voters want than increasing wealth. Whether you agree with them or not, they also care about equality (they want to transfer wealth to those unable or unwilling to save money) and “fairness” (in the form of restrictions on voluntary exchange in the form of price floors and ceilings). Not to mention that increasing wealth means a bigger market for big business, and a greater incentive for it to collude with government.

  8. Gravatar of Charlie Charlie
    12. July 2011 at 16:15

    Here’s a few U.S. cities from http://blogs.wsj.com/wealth/2010/08/03/new-york-has-the-most-millionaires/

    I don’t know what it tells us, except that across U.S. cities it’s probably a pretty problematic comparison.

    City Millionaires Pop. % Millionaires

    D.C. 152400 601723 25.33%
    SF 138300 805235 17.18%
    Boston 102300 617594 16.56%
    Detroit 89100 713777 12.48%
    San Jose86500 945942 9.14%
    New York667,200 8175133 8.16%
    Chicago 198100 2695598 7.35%
    Phil 104100 1526006 6.82%
    LA 235800 3792621 6.22%
    Houston 88200 2099451 4.20%

  9. Gravatar of Charlie Charlie
    12. July 2011 at 16:18

    City Percent
    D.C. 25.3%
    It looked good on my screen:

    SF…………..17.2%
    Boston……….16.6%
    Detroit………12.5%
    San Jose………9.1%
    New York………8.2%
    Chicago……….7.3%
    Phil………….6.8%
    LA……………6.2%
    Houston……….4.2%

  10. Gravatar of Grace Grace
    12. July 2011 at 16:21

    I would hazard a guess that a large proportion of that is driven by high home ownership rates and skyrocketing property values.

  11. Gravatar of A Million Millionaires! A Million Millionaires!
    12. July 2011 at 17:18

    [...] Scott Sumner - Prof. Sumner’s comments ) Share/Bookmark Tagged with: Asia • economics  /* */ /* [...]

  12. Gravatar of John Thacker John Thacker
    12. July 2011 at 17:26

    How is it that Singapore has a larger proportion of millionaires to the United States, but its GDP per capita is only around $10,000 more (Singapore: $56,000 vs US: $47,000, pulled from IMF WEO database)?

    You’d have to see the individual distribution to be sure, but for a normal distribution really doesn’t take a small change in mean to have a dramatic difference in the percentages at the tails. For example, for a normal distribution, about 16% is at least one standard deviation above the mean; about 6.7% is one and a half standard deviations above.

    Also remember that GDP is a yearly figure; being a millionaire is a wealth/lifetime figure. Compounding it is that the millionaire number is a household figure, and the average household has multiple people. If the average household gets $25,000 more per year and saves it, it’s a lot easier to become a millionaire.

  13. Gravatar of Scott Sumner Scott Sumner
    12. July 2011 at 17:32

    JPIrving, I’m sure they are a tiny percentage. But undoubtedly there are special factors.

    Charlie, It is a tax haven, but also a highly productive economy with a very high per capita GDP. The strong franc helps too.

    Lucas, You said;

    “Effective industrial policy and the low (or negative) growth in TFP, which we know is the ultimate driver of growth and living standards.
    - The huge restrictions on land development and housing.
    Also, I prefer Scandinavian egalitarianism to Singaporean individualism. I think there’s such a thing as an excess of meritocracy even as I think that of all the class divisions, a meritocratic society is the least bad.”

    The industrial policy contributes to the low TFP. But Singapore does many other things very well. It is number two behind Hong Kong in the various indices of economic freedom. That’s partly because it’s very competitive, despite the industrial policy. In other words, there are industrial policies and there are industrial policies–and Singapore has the less bad kind. They don’t tax savings, which is a huge plus, and is the biggest problem with the US economy. People pay for health care out of pocket, with the government spending only 1-2% of GDP on health care.

    I’m also a big fan of the Nordic model. Interestingly, Matt Yglesias has argued that the Nordic and Singapore models are more similar than they seem. Singapore has a much less egalitarian culture, which is a disadvantage, but does pretty well with the culture they do have. Corruption is fairly low, and they have done a good job in reducing poverty. They also have good environmental policies. The biggest weakness is an overly authoritarian government.

    Sanchit, Don’t confuse income and wealth. They save waaaaay more than we do.

    OneEyedman, Please don’t compare my ideas to Bush. I am talking about a high saving society. He pushed a low saving high spending society. The question or risk is entirely separate from saving, and is obviously a political decision. It probably makes sense to require at least X dollars goes into safe investments. But other countries have made this work.

    blacktrance. You said;

    “I think this view is far too optimistic. There is more to what voters want than increasing wealth. Whether you agree with them or not, they also care about equality (they want to transfer wealth to those unable or unwilling to save money) and “fairness” (in the form of restrictions on voluntary exchange in the form of price floors and ceilings).”

    My next post will show that there is no trade-off between a high saving society and a equal society. Government can transfer money to those unable to save. Price controls are stupid, the US got rid of most of them them in 1974, and it’s hard to find a single economist who wants to bring them back. Massachusetts even voted to eliminate rent controls.

    Charlie, Those numbers are way too high, you need to divide by metro population, not city pops.

    Grace, Both Charlie and my figures exclude homes.

  14. Gravatar of st st
    12. July 2011 at 17:48

    Singapore got excellent policies for any company set up shops in its country. Only the true value added technology companies would allow to be in the country. The gov actively seek leading technology companies and acquire or use incentive to attract the next gen of technology companies. In addition, it got access to cheap labour in the surrounding area, such as India, Malay, etc. The policy made the cheap labour very difficult to stay overnight in the country. You see load of people hoop on the train heading back home in near by 3rd world countries every evening.
    The key success of Singapore also due to its excellent MBA program. Just check the example: “GCE management of business exam for 1996 to 2006″(ISBN 981-00-1528-3)-actual exam questions and answers will tell you that Rome is not build in a day. Stability, good policy, smart critical mass of management, cheap labour and selective target technology are made them rich. (Singapore was the one country used to run on two main frame computers way back, that controlled everything from school work to shipping port). They are small, but super efficient. The young men must complete army training in the country (not sure about the women). That provide good work force that is loyal, hard working and disciplinary (reliable is key things that some Asia country is missing). Not surprise at all. They plant the seeds long time ago.

  15. Gravatar of eric eric
    12. July 2011 at 18:13

    @SS: “Massachusetts even voted to eliminate rent controls.”

    Just because voters voted for something doesn’t mean it was a good idea. I personally think rent control is probably a bad idea overall, but ballot questions are not a great way to decide.

  16. Gravatar of Charlie Charlie
    12. July 2011 at 19:02

    “Charlie, Those numbers are way too high, you need to divide by metro population, not city pops.”

    You are right. I didn’t see that the numerator was using metro areas. The data and pop are here:

    http://www.businesswire.com/news/home/20110712006307/en/Capgemini-Releases-2011-U.S.-Metro-Wealth-Index

    It looks like only San Jose is above the national average, that the FT used that the BCG came up with. Not sure where all the millionaires are hiding or maybe it’s just different methodologies.

  17. Gravatar of Boris Boris
    12. July 2011 at 19:43

    Charlie, are you using the same definition of millionaire as the other people? Your numbers are for $1 million in investable assets, not total assets (e.g. would exclude primary residence, which is a big deal in most parts of the US northeast, at least). It’s not clear how the Singapore numbers are measured.

  18. Gravatar of Lucas Lucas
    12. July 2011 at 21:23

    Scott,
    “The industrial policy contributes to the low TFP. But Singapore does many other things very well. It is number two behind Hong Kong in the various indices of economic freedom. That’s partly because it’s very competitive, despite the industrial policy. In other words, there are industrial policies and there are industrial policies–and Singapore has the less bad kind.”
    So you:
    - agree with Krugman that the East Asian miracles are best explained by the huge mobilization of resources.
    - say that their GDP would be even higher without their industrial policy and government involvement in many sectors? I’d like to know which are those “least bad” industrial policies.

    “Interestingly, Matt Yglesias has argued that the Nordic and Singapore models are more similar than they seem.”
    Yes, both are technocratic and tilt towards liberalism. I wonder how would you sell technocracy and “government doesn’t have to be the problem” to the American electorate, specially the conservatives and dogmatic libertarians. The main difference between the models is egalitarianism vs individualism and I prefer the former, even if it means I have to pay higher taxes.

    “Corruption is fairly low”
    The good governance thing, a must in any serious theory of development.

  19. Gravatar of Misaki Misaki
    12. July 2011 at 21:38

    More than 180,000 people 40 years or older in Singapore were earning less than S$1,000 (nearly $740) a month as of June last year. Another 154,000 over 40 were earning less than than S$1,500. Together they made up more than 17 per cent of the 1.86 million-strong local workforce (source: MOM).

    This happens in Australia as the minimum wage of A$15 an hour has put off much business expansion. The sharp rise in utilities cost has also added to the strain of doing business in Sydney so much so that many have even considered pulling out of that city and relocate to cheaper places such as Queensland and Victoria.

    More significantly, business owners have also pass such cost directly to the consumers. For example, in Australia, a loaf of bread costs A$4 on average, a visit to the GP sets you back by $50 and eating out costs you a minimum of A$10 for anything on the food menu. It is a luxury to eat out and many simply buy back groceries to cook at home.

    http://www.transitioning.org/2011/06/03/consequences-of-having-minimum-wage-system/

    A shoe-box unit, common in countries such as Hong Kong and Tokyo, refers to an apartment usually smaller than 500 square feet. A three-room HDB flat is about 700 square feet.

    In Singapore, the annual take-up of these very small units has increased from 300 units in 2008 to 1,900 units in 2010, or from 6 percent to 12 percent of developers’ sales over the same period. Eighty percent of these buyers are Singaporeans.

    http://sg.news.yahoo.com/blogs/singaporescene/gov-t-closely-watching-market-shoe-box-units-070546492.html

    The 2009 batch of graduates from NUS, NTU and SMU were asked about their starting pay and whether they were employed on a permanent basis.

    The highest starting salaries come from the 4-year Information Systems Management programme at Singapore Management University. Those who graduated from this course with at least a Cum Laude (“with honour”) got a median starting pay of $4,000. One quarter of them earn $4,600 and above. However, only 72.2% of them are employed on a full-time permanent basis.

    The worst performing course is the NTU Art, Design & Media. A mere 61.7% of the graduates are permanently employed. Half of them earned $2,300 and less.

    http://www.transitioning.org/2010/04/07/graduate-employment-survey-2009-published-2010-salary-sg/

    Nor will there be as much need for social insurance programs as in the West; most people will be able to take care of themselves.

    ?

    Many low saving Americans need social insurance; others are resentful of the rich and support anti-market policies. Unless we are able change this dynamic we don’t have a bright future.

    More accurately, many Americans without a job need jobs. However, since only 42% of the general public think that the government should borrow money to create jobs, and 52% think the gov’t should not (Question 18), fiscal stimulus is not likely to happen and jobs should be created without more government spending.

    This can be accomplished as described here:
    http://pastebin.com/QrmDEymL
    http://pastebin.com/Q86Zhgs9

  20. Gravatar of TheNumeraire TheNumeraire
    12. July 2011 at 22:23

    What’s striking about the FT data is that the U.S. does not have nearly as many super-wealthy as a percentage of total millionaires as some of the more “equal” European countries. Folks like Joe Stiglitz are always characterizing America as an elitist oligarchy and yet;
    - Germany has 7% of the number of millionaires as the U.S., but nearly one-third as many super-wealthy

    France, Italy, the UK etc. have similar but less pronounced patterns. Australia has a great many super wealthy but does not crack the top 15 in terms of percentage of millionaires divided by total households.

  21. Gravatar of FT Alphaville » Further reading FT Alphaville » Further reading
    12. July 2011 at 23:13

    [...] – The market for Singaporean millionaires. [...]

  22. Gravatar of Sam Sam
    13. July 2011 at 00:43

    “Both Charlie and my figures exclude homes.”

    Well that’s one reason why Singapore’s ahead. Almost everyone lives in government-owned and subsidised housing. So they have more money to save.

  23. Gravatar of Daily Reading – Wednesday, July 13, 2011 | Tainted Alpha Daily Reading – Wednesday, July 13, 2011 | Tainted Alpha
    13. July 2011 at 02:01

    [...] Money Illusion: A million millionaires According to a study reported in the Financial Times, more than 15% of Singapore households are [...]

  24. Gravatar of James Moughan James Moughan
    13. July 2011 at 04:57

    “Singapore is an authoritarian government that is gradually allowing more democracy”

    Wow, you’re actually the first economist I’ve heard say that. Often they enthuse about Singapore as if it were a perfect state. Kind of creepy actually.

    If Americans saved as Singaporeans are forced to then what would be the result? Presumably there would be massive asset price inflation and investment yields would tend towards zero, right? I don’t believe there’s actually a productive use for all that capital, as the housing bubble seems to demonstrate; the availability of massive amounts of cheap capital didn’t lead to an exceptional business investment in 2000-2007.

  25. Gravatar of Scott Sumner Scott Sumner
    13. July 2011 at 06:31

    st, Thanks for the info.

    eric, I tend to favor ballot questions on simple yes no questions, not complex spending questions.

    Charlie, Must be different methodologies or years, otherwise more than San Jose would have been above average.

    Boris, Both exclude houses.

    Lucas, You said;

    “So you:
    - agree with Krugman that the East Asian miracles are best explained by the huge mobilization of resources.
    - say that their GDP would be even higher without their industrial policy and government involvement in many sectors? I’d like to know which are those “least bad” industrial policies.”

    Krugman is obviously wrong, as Hong Kong got just as rich without an industrial policy. So that theory is groundless. Here’s an example of a less bad industrial policy. Singapore Air is government-owned, but unlike most government-owned companies, it is not subsidized and it is not protected from competition. Hence it is forced to be efficient. It’s run like a private company.

    One thing I’ve noticed is that when progressives look at any success story they always look at what the government did, not what it doesn’t do. Yes, the Singapore government does a lot. But so do all other governments. Have you ever looked at a list of all the regulations in America? All the ways the government intervenes in our economy? It’s absolutely overwhelming. The bottom line is that Singapore has smart, low tax, free trade, pro-competition, high saving, environmentally friendly policies.

    Lucas, You said;

    “The main difference between the models is egalitarianism vs individualism and I prefer the former, even if it means I have to pay higher taxes.”

    Singapore does do some redistribution. They have national health care, for instance, and a number of other programs. The main source of their lower taxes is that they force middle class people to save for their health costs, retirement etc. That’s a great idea, and doesn’t prevent egalitarian programs for the poor. Check out my post on egalitarian, low-tax Australia.

    The US can’t adopt the Danish model of welfare, because we don’t have Danish culture, which is the least likely to abuse benefits of any culture in the world. But even they found too many people were abusing unemployment, so they cut it back to a maximum of two years. We now have the same maximum period as Denmark! Indeed a study by Algan and Cahuc showed why the Danish model doesn’t work in southern Europe.

    See my next answer, regarding income distribution.

    misaki, Those income distribution numbers mean nothing unless I know how many are foreign workers. Egalitarians should praise Singapore for bringing in lots of foreign workers, so long as they are better off than in their home country.

    When I lived in Australia it was cheap to eat out, but their dollar was then only 65 cents US.

    TheNumeraire, That struck me too, I was thinking of doing a post, but wonder how reliable those numbers are. Does anyone know?

    Sam , You said;

    “Well that’s one reason why Singapore’s ahead. Almost everyone lives in government-owned and subsidised housing. So they have more money to save.”

    No!!!! Repeat after me, 100 times “There is no such thing as a free lunch.” Singaporeans do have to pay for their housing.

    James, The saving is for health expenditures, and retirement. The point is to overcome the huge disincentives to save in our current system.

    Don’t you think America could use more infrastructure?

  26. Gravatar of James Moughan James Moughan
    13. July 2011 at 10:02

    As I understand it I am not an American), America’s public infrastructure is crumbling, so yes it could use more investment. But that has nothing to do with the willingness of the market save, i.e. to buy US government debt. The US could go out tomorrow and borrow an extra trillion for ten years at a fraction over 3% and spend it all on new infrastructure. The issue is purely political.

    You’re assuming that saving is good. Of course on an individual basis Americans would do better is they were to save more. In an economy that’s newly industrialising saving is a public virtue, as new steel mills and concrete factories and roads and all the rest can absorb more capital than a society can produce. But in a post-industrial society, where businesses tend not to be very capital intensive, I don’t see a reason to think that a high saving rate is a public virtue. And I do see reason to think that an excess of capital is harmful, because it appears the market will invent new and questionable investments (subprime) if there is too much money chasing too few genuine opportunities.

  27. Gravatar of Jason Jason
    13. July 2011 at 10:40

    I went and did the same thing Charlie did when I first read this. There are several questions about methodology that follow, but I think they miss the point. Different accounting of what is wealth only tells you more about policy differences than overall wealth differences. We have 401k’s; they have their SWF. Using the entire metro area for US cities gets into comparison difficulties because the Singapore metro area is the city of Singapore.

    The basic conclusion is that Singapore has a high number of millionaires because it is a city in a wealthy country (that is also the city) that has a high population density, and higher density drives up wages … stuff is more expensive in cities than in rural areas.

    Comparing e.g. DC, Singapore or NYC by millionaire population density (pop density * frac millionaires), you get about the same number: ~1000/sqkm.

  28. Gravatar of Lucas Lucas
    13. July 2011 at 11:22

    Scott,
    “Krugman is obviously wrong, as Hong Kong got just as rich without an industrial policy. So that theory is groundless.”
    Well, Hong Kong may be the exception that proves the rule. Krugman’s famous article [1] is backed up by seemly solid evidence. Not only that, it was endorsed by The Economist [2] and Krugman made a warning about rapid growth combined with huge current account deficits: the Asian crisis vindicated him. He has a pretty good record (he was skeptical of our currency board, he was/is skeptical of the euro, the spotted the American housing bubble, he’s been mostly right over the course of events of the great recession, etc) for being a polemist.

    “Here’s an example of a less bad industrial policy. Singapore Air is government-owned, but unlike most government-owned companies, it is not subsidized and it is not protected from competition. Hence it is forced to be efficient. It’s run like a private company.”
    So, the problem isn’t government meddling or government ownership, the problems are bad incentives, incompetent managers, regulatory capture and so on.

    “One thing I’ve noticed is that when progressives look at any success story they always look at what the government did, not what it doesn’t do.”
    Guilty as charged. I have my own fights with fellow progressives when I say: “Yeah, Scandinavia is wonderful and look at all that social spending but did you know that it has private pension funds, no minimum wages, flexible labor markets, school vouchers, free trade agreements, budget surpluses? It looks like a neoliberal paradise”

    “Yes, the Singapore government does a lot.”
    I applaud your intellectual honesty, that’s what make it a pleasure to read your blog. If one is guided by the rhetoric of free-market proponents, one would think that Singapore is some laissez faire Eden.
    What would the world be if everyone speaks citing cold, hard evidence and avoiding rhetorical excesses?

    “”Have you ever looked at a list of all the regulations in America? All the ways the government intervenes in our economy?
    I don’t have that much time ;)

    “The bottom line is that Singapore has smart, low tax, free trade, pro-competition, high saving, environmentally friendly policies.”
    That’s an argument for technocrats operating under good incentives, checks and balances. It doesn’t support the sound bites of “get government out of the way” or “cut spending in half, right now”.

    “The main source of their lower taxes is that they force middle class people to save for their health costs, retirement etc.”
    I think I can get along with that.

    “That’s a great idea, and doesn’t prevent egalitarian programs for the poor.”
    I think that there’s a great misunderstanding on what’s egalitarianism. I’m not a political philosopher but egalitarianism isn’t welfarism or charity for the poor. It basically amounts to:
    - Equality of opportunity, which is much more than just equality before the law. It involves using evidence-based policies like child nutrition support, early childhood stimulation, high-quality education for all, universal health insurance, family planning, environmental justice, access to financial services, promotion of savings, health checks during pregnancy, home-visiting nurses, fighting the social determinants of health inequality [3], active labor market policies and so on.
    - Living above a minimum threshold of dignity and having access to basic goods and services such as healthy food, clothing, education, health, quality housing, leisure.
    - Insuring against the unavoidable risks of life like unemployment, sickness, old age, bad parents, fast technological change.
    - Concern about the social/ethical/political/economical consequences of obscene wealth and income concentration.

    “Check out my post on egalitarian, low-tax Australia.”
    I’ll do.

    1- http://www.ssc.wisc.edu/~munia/475/SS10475lecture8.pdf
    2- http://www.pkarchive.org/others/miracle.html
    3- http://www.who.int/social_determinants/en/

  29. Gravatar of blacktrance blacktrance
    13. July 2011 at 14:32

    Scott,
    Most economists support the abolition of price controls, but the public does not share their view (and has a considerable anti-market bias). A ballot initiative here or there doesn’t mean that the public doesn’t support the principle behind price controls – the idea that there is a “fair” price and to charge above it is exploiting the worker or consumer. They don’t realize or don’t care that price controls cause shortages. The idea of letting market processes run their course and then giving something like direct transfers to the poor is unappealing to the general public because (to get a little Hansonian here) they vote to express their disapproval of what they view as injustice, and whether that improves the human condition is a secondary consideration, if one at all. Remember, there’s a reason why progressives use France as an example of a society they’d like much more often than they mention Denmark or Australia.

  30. Gravatar of ssumner ssumner
    13. July 2011 at 18:12

    James, Keynes also thought we were running out of investment opportunities. I think there are lots of things that we could invest in, such as reducing global warming, or medical research. I also think economies run more efficiently with high savings, you have less unemployment because economic policy is more effective. You have less wasteful health care spending, because people are paying out of pocket, out of their savings. Even if we need to save less, I’d have the public save more, and have the government save less.

    Jason. No the cost of living in Singapore is not higher than the US.

    I don’t follow your last point at all. We have 15 times as many per square mile as Australia, what does that prove?

    Lucas, You said;

    “Well, Hong Kong may be the exception that proves the rule. Krugman’s famous article [1] is backed up by seemly solid evidence. Not only that, it was endorsed by The Economist [2] and Krugman made a warning about rapid growth combined with huge current account deficits: the Asian crisis vindicated him.”

    Whoa, slow down. It’s not the exception that proves the rule. Unless you can explain why Hong Kong’s economic performance is almost identical to Singapore, you can hardly argue that Singapore’s depends crucially on SOMETHING HONG KONG DOESN’T EVEN DO. That flies in the face of logic. And Krugman didn’t predict the East Asian crisis as he himself has admitted. And Singapore has become richer than the US in PPP terms, whereas Krugman was comparing Singapore to the Soviet Union. How’d that prediction turn out? Oh wait, another commenter said Singapore was communist.

    Lucas, You said;

    “So, the problem isn’t government meddling or government ownership, the problems are bad incentives, incompetent managers, regulatory capture and so on.”

    The problem is subsidy and barrier to entry. Lacking those two you have pure competition, with one firm that happens to be government-owned. The reason SOEs in Europe were so inefficient in the 1970s (before neoliberalism) was because they were subsidized to prevent job loss, and/or protected from competition. I remember when America allowed only one phone company–ATT.

    You said;

    “- Equality of opportunity, which is much more than just equality before the law. It involves using evidence-based policies like child nutrition support, early childhood stimulation, high-quality education for all, universal health insurance, family planning, environmental justice, access to financial services, promotion of savings, health checks during pregnancy, home-visiting nurses, fighting the social determinants of health inequality [3], active labor market policies and so on.
    - Living above a minimum threshold of dignity and having access to basic goods and services such as healthy food, clothing, education, health, quality housing, leisure.
    - Insuring against the unavoidable risks of life like unemployment, sickness, old age, bad parents, fast technological change.
    - Concern about the social/ethical/political/economical consequences of obscene wealth and income concentration.”

    You do realize that even if you were made dictator of the US, and allowed to set tax rates wherever you wanted them, that there’s no way in hell that laundry list could be provided by the US government, don’t you? Reading that at times I almost thought you were being satirical, making fun of liberals who think the government can solve every problem. (Maybe you were, I often miss jokes of my commenters.)

    blacktrance, There is no such thing as “public opinion.” Public opinion polls are uselss as far as determining public views, because they depend completely on the way questions are asked. The views are often mutual incompatable, so the public will seem to strongly support both sides of a question. You can get the public to say we spend far too much on Medicare, or far too little, merely by changing the wording of the question.

    What matters about public opinion is voting behavior. By far the most democratic country in Europe (no one else is even close) is Switzerland. Switzerland also happens to be about the most capitalist country in Europe, or at least close to it. So much for anti-market bias.

  31. Gravatar of Steve Steve
    13. July 2011 at 18:54

    I’m just going to throw this out there and I’m trying to be scientific: Singaporean’s never get laid. I’m serious. Singaporean’s don’t report being too happy about their millions despite the correlation between income and happiness elsewhere in the world. Maybe it’s because they gave up so much to get the money? (Remember, Singapore may be richer than the U.S., but only because the people work a lot more hours. Their per hour productivity is what, half of ours?)

  32. Gravatar of Jason Jason
    13. July 2011 at 18:57

    Scott, you said: No the cost of living in Singapore is not higher than the US.

    I wasn’t saying the cost of living is higher in Singapore than the US; I was saying it was higher in NYC than the rural US.

    Scott, you said: I don’t follow your last point at all. We have 15 times as many per square mile as Australia, what does that prove?

    I was talking about the city population densities, not the national population densities, but I have to rethink my metric: I found out that Melbourne has a (mean) millionaire density of about ~ 10/sqkm. I was thinking it would be closer to NY, DC or Singapore ~ 1000/sqkm. Hong Kong only has about 500 millionaires per sqkm.

    I was trying to account for the density of cities since that tends to drive prices up. However, I was thinking about it that might just show which cities have more restrictive zoning.

  33. Gravatar of Scott Sumner Scott Sumner
    14. July 2011 at 08:40

    Steve, I studied happiness in 32 developed countries, and the 5 Asian members tended to score well below average. Could be how different cultures answer questions–hard to know. But I recall that Singapore was far higher than the other Asian countries in that group of 5 (incl. Japan, Taiwan, Korea, HK.)

    I’ve talked to people who have lived there (I’ve only visited) and they tell me living standards are quite high. It’s not perfect–houses tend to be small, for instance.

    And prostitution is tolerated.

    Jason, You said;

    “I wasn’t saying the cost of living is higher in Singapore than the US; I was saying it was higher in NYC than the rural US.”

    Then why did you say the cost of living in Singapore was high because it was urban?

    This is what you said:

    “The basic conclusion is that Singapore has a high number of millionaires because it is a city in a wealthy country (that is also the city) that has a high population density, and higher density drives up wages … stuff is more expensive in cities than in rural areas.”

  34. Gravatar of mpowell mpowell
    14. July 2011 at 13:03

    What is the market value of SS and medicare to 65 year old Americans? I’m thinking that would be somewhere in the ballpark of $500-750K. Add that to the 90% of US households that are expecting SS and medicare and I’d bet they’d shoot up those rankings. After all, that’s all Singapore’s forced savings represent- an alternative to SS where now your retirement also depends on what the markets are doing when you need the money. People get far too worked up about the benefits of pushing money into the stock market as opposed to letting the government handle it. It has very little impact on the amount of economic energy used for present day consumption versus investment to expand future production abilities.

  35. Gravatar of ssumner ssumner
    15. July 2011 at 09:52

    mpowell, But that’s exactly my point. Singapore has saved up to take care of its old, we haven’t. THE MONEY’S NOT THERE. The wealth you talk about is offset by a corresponding liability from taxpayers.

  36. Gravatar of Everyday Lessons Learned: July 2011, Week 2 « Aesthetics of Everywhere Everyday Lessons Learned: July 2011, Week 2 « Aesthetics of Everywhere
    19. July 2011 at 18:07

    [...] 13: Over 15% of Singapore households are millionaires. I know Singapore’s a city-state, but still – unbelievable. (A million millionaires) [...]

  37. Gravatar of TheMoneyIllusion » A hundred million millionaires? TheMoneyIllusion » A hundred million millionaires?
    15. December 2012 at 11:22

    [...] high saving model.  Last year I noted that 15% of Singaporeans were millionaires in 2010, and I predicted that the number would rise sharply over the next few decades.  The numbers for 2011 are in and the [...]

Leave a Reply