Singapore sits moodily atop wealth pole

Dec 29, 11 Singapore sits moodily atop wealth pole

Haven’t posted anything for quite a while, but this is worth keeping.

Sunday, Dec 25, 2011

The Business Times

Last month, if Singapore had been a person, it would have stood above the unwashed tableau of Occupy Wall Street (OWS), watching from its penthouse and laughing into its cognac.

But it has spent the year being a little down in the mouth, preoccupied with property prices, taxi fares and faulty trains.

This gloom is hard to explain in the grander scheme of things.

When OWS’s gross simplification of the one per cent trampling on the 99 per cent is contemplated, Singapore is practically part of the world’s one per cent.

This is a country where, every single day, 25 people bought either a Mercedes-Benz or a BMW for the first 11 months of the year. 20111225.150958_sggraph2-300x268

In the same period, every four days, someone drove away from the Ferrari showroom with a big smile on his face. (One assumes that, each time, it’s a different person.)

When it comes down to it, Singapore can be almost as Wall Street as Wall Street.

Last year, 8.5 per cent of New York City’s workforce was on the payroll of the finance and insurance industries.

Singapore had about 6.4 per cent of its resident population on it, while Hong Kong had 6 per cent.

If a demonstrator with anti-banking invective to expend were to imagine the two as corporate entities – which is not hard – he would therefore be more inclined to picket Singapore than Hong Kong.

“One per cent” might be a dirty term these days, but would-be picketers here have to be careful about calling others names that might apply to themselves.

On a per-adult basis, Singapore has the sixth highest net wealth in the world: a mean value of US$284,692, according to the Credit Suisse Global Wealth Databook 2011.

“Net wealth” here is defined by a person’s financial and real estate assets minus debt.

The mean value, however, gets short shrift from experts, since it ignores wealth distribution.

“(It is the) mean without information on inequality. A very high personal net wealth with high inequality is likely to imply a skewed prosperity within the country . . . Actually, it is not something we would like to boast about,” says Ho Weng Kong, senior lecturer at SIM University.

The median net wealth figure then – which is less vulnerable to being yanked up or down by the obscenely rich or the devastatingly poor – sees Singapore ranked eighth out of 160 countries, at US$101,033.

On this score, the only countries that outrank it are Australia, Japan, Belgium, Iceland, Italy, Luxembourg and the United Kingdom.

Last year, the odds of being born in any one of these countries, including Singapore, was 2 per cent – not quite the fabled one per cent, but close enough.

This is better than the best odds in the Singapore Toto (one in 321), but to properly appreciate the jackpot-like nature of being born in any of these eight countries, the rest of the world needs to be surveyed.

At the best end of the ovarian lottery, more than half the adults in Singapore belong to the wealthiest 8.8 per cent of adults globally.

And while the one per cent of the United States might be under the onslaught of scrutiny there, the global one per cent club is thriving in Singapore; two out of every 25 adults here can claim membership.

On the losing end of the ovarian lottery, however, only 0.3 per cent of the adults here have less than US$1,000 in net assets.

Perhaps it is not so much that Singapore is fabulously wealthy (which it is), but that the rest of the world is poor (very much so).

Suppose you represent Singapore’s population with 100 people riding on a bus.

If that bus were to stop at the world’s poorest neighbourhood to let residents get off, less than one person would alight.

This shantytown, however, is where more than one-fifth of the world’s adults have to live.

This says as much about the rest of the world as it does Singapore.

To be better off than half the adults on this planet, the threshold is heartbreakingly low. All it takes is US$4,200 in net assets.

‘Only moderate inequality’20111225.150958_sggraph

This perhaps goes some way towards clarifying why Occupy Wall Street took off but Occupy Raffles Place bombed in a way that would embarrass nitroglycerine.

Tropical humidity and legal concerns aside, the conditions for dissatisfaction are different.

In the United States, 10 per cent of the adults control 73 per cent of the wealth.

Here, the privileged group controls just 57 per cent, which translates to “only moderate inequality” in Credit Suisse’s book.

Many, however, will take issue with “only” and “moderate”.

Academics like SIM University’s Dr Ho are quick to point out that “among the developed countries, we are at the very top” of the inequality stakes.

Based on numbers from the Central Intelligence Agency, Singapore is ranked 28th out of more than 100 countries on the Gini Index.

The higher the ranking, the greater the inequality.

Citigroup economist Kit Wei Zheng makes a sobering point about the lowest-earning 20 per cent here. For this group, in the first half of the noughties, “the rising Gini coefficient was partly due to declines in the absolute levels of wages”, he says.

“While the period of fast growth in 2004-2007 did see wages for the bottom 20 per cent recover most of their earlier losses, wages of the rich rose much faster.”

This means that the bottom 20 per cent of working folk have spent much of the last decade standing still – an unpalatable notion when the rest of Asia appears to be pelting ahead.

Stuck in the middle with you


Mr Kit might have considered the plight of the working class and the prosperity of those flying First Class, but it is the condition of the middle class – this increasingly vocal and dissatisfied group – that is the most perplexing.

It is not clear what OWS’s demographics are like, but in Singapore, the events of this year have been given over to middle-class angst, not proletarian anger.

“A concrete example of this discontent can be seen in the recent general election in which the PAP garnered its lowest percentage of votes . . . since Independence,” says Kamaludeen Mohamed Nasir, an assistant professor of sociology at the Nanyang Technological University (NTU).

“The main issues . . . are a combination of the rising cost of living in Singapore and the lower standard of living . . . linked to the large increase of migration into the country over the last few years.”

Even if the issues are articulated, clarity does not necessarily follow in this relatively new examination of middle-class ennui.

“To better understand the extent of these anxieties, more rigorous research is needed,” says Prof Kamaludeen.

Tan Ern Ser, associate professor of sociology at the National University of Singapore (NUS), readily lists the lamentations of the middle class: a higher probability of downward mobility while being caught between the duties of filial piety and the obligations of parenthood.

Does the whinging bear listening to? This is harder to answer.

“Whether the issues are valid depends on the standards they compare their lifestyles with. If they were to compare with their parents’ generation, they would be very satisfied. But obviously, they don’t. They expect to live the Singapore Dream, equivalent of the American Dream,” says Prof Tan.

But the American Dream is in tatters now.

Maybe looking West no longer riles the middle class as much as looking upward does.

Says Mizuho economist Vishnu Varathan: “Being disgruntled is always a relative thing. More often than not, it is the middle class who tend to be more disgruntled. They tend to be slightly more educated and upwardly mobile, so they are frustrated when they see the guy earning the $1 million salary.

“They might not be badly off. They might be getting their $80,000 or $100,000 a year, but they’re disgruntled because they think, ‘Hey, I know almost as much as that guy does. Why is he getting the $1 million salary?'”

Incidentally, to have come within even wine-sniffing distance of the $1 million salary last year, you would have needed to be part of the proverbial top one per cent of tax-paying residents, according to data from the Inland Revenue Authority of Singapore.

To be disgruntled about getting $80,000-100,000 a year, you would have to be unhappy about being in the top 28.37 per cent.

This excludes residents earning $20,000 or less and are therefore not taxed.

Why so glum, chum?


There is, however, the niggling worry about mobility.

Where this is concerned, experts struggle to be definitive on the matter, but it is clear which way they are leaning.

“Given my own research using limited Singapore data and an assessment of the political economy in Singapore, (my assessment) is that mobility is relatively low compared to other developed economies,” says Irene Ng, assistant professor of social work at NUS.

Chia Wai Mun, assistant professor of economics at NTU, says that in Singapore, “there is a significant jump in the income and educational status of later generations relative to the earlier ones”.

“However . . . intergenerational mobility . . . is low. Those whose parents were at the bottom tend to remain at the bottom and those whose parents were at the top tend to stay at the top.”

It does not help either that even the asset-rich might not feel rich.

In the last quarter, residential property assets made up 50.2 per cent of total household assets here.

Says Citi’s Mr Kit: “Having a large chunk of wealth plastered into your home may not necessarily be a good gauge of economic well-being, especially when there are limited avenues to monetise housing net wealth in Singapore.”

Ultimately, the math of the middle class is a messy one.

But even the less mathematically rigorous endeavour of counting your blessings is hard when you do not have much time for it.

Last year, the average person in Singapore worked the most hours among developed countries, clocking 2,409 hours annually.

Norwegians worked just about half as hard: 1,414 hours.

Gallingly, Singaporeans were among the least productive, with the fourth-lowest gross domestic product per hour worked in purchasing power parity terms – while their restful Norwegian counterparts ranked first.

Whether cubicle drones here have themselves and Facebook-surfing to blame is as muddled as the larger issues that plague the middle class.

OWS is, on tangible terms, a shadow of itself.

Last month, police evicted protesters from Zuccotti Park, the movement’s flagship site.

Thousands of protesters-turned-homeless people melted into the night with no place to go.

Singapore, with its 87.2 per cent home ownership rate among residents, will not find answers in OWS.

That does not mean, however, that the questions will go away.
This article was first published in The Business Times.

Leave a Comment

Your email address will not be published. Required fields are marked *