A simple theory of Singaporean complaints

by on August 8, 2015 at 12:00 pm in Economics, Political Science, Uncategorized | Permalink

Despite having one of the highest per capita incomes in the world, Singaporeans, believe it or not, have a few complaints.  Some of these are political, but others are economic, and many intertwine the two factors.

Here’s a simple model which helps explain at least a few of these complaints.  The nicer a place Singapore becomes, the more it is flooded with outside capital and migration.  That raises the cost of land and thus rents and home prices.  Imagine if I didn’t own a home and suddenly Fairfax, VA became like Beverly Hills or Palo Alto.  I would have to pay more, but wouldn’t benefit much from the proximity of the movie stars or the tech titans.

For Singapore these effects are especially strong.  The potential flow of outside capital is large relative to the size of the city-state.  And because Singapore is small, the supply of decent, low-rent neighborhoods to move to is drying up and so the hinterland has pretty much disappeared.  That said, I once argued that some parts of the Singapore arts community will end up priced into southern Malaysia; not every Singaporean I spoke to was happy to hear this.

(If you are studying the future of Singapore, keep your eye on that southern Malaysian gateway.  One of the most important questions the two governments face is just how easy to make that border crossing.  Right now it is “doable” but could be much easier, given the underlying wealth and competencies of the two governments.)

The political reaction is to make Singapore an even nicer place to live, which is what you would expect from a competent government.  That’s great, but in some ways it makes the underlying problem worse by attracting additional foreign capital and labor.  The city becomes more Westernized and more corporate and land values rise all the more.

This risk to Singapore is fundamentally about pecuniary externalities.  It would all work better if this influx of capital and labor boosted service sector productivity for ordinary Singaporean jobs, but it is not obvious that it does.  I’ve even heard credible reports that service sector productivity in Singapore is declining, though only slightly.

While most Singaporean households own their living quarters (I have seen estimates ranging from eighty to ninety percent), this is not entirely comforting to younger people living with their parents who eventually must buy or rent their own place.  Or to immigrants, who make up over slightly half of the population and who typically do not own land property.

Eventually this stock of housing wealth will be inherited, but in the meantime large numbers of Singaporeans feel “income poor.”  And they feel more income poor each year.  Implicitly they convert future wealth into current liquidity by borrowing and indeed Singapore has a level of household debt which is surprisingly large to many people — about 75% of gdp.  The debt service on those loans will cut into future real income of course.  And the population faces a rate of forced saving which can amount to a third of income.

The upshot is that immigrants to Singapore consume far more niceness than they would like to, and at high prices.   The citizens and land and apartment owners and capital owners become wealthy, but at the same time many people — most of all service sector workers, including the natives — feel they had higher living standards ten or fifteen years ago.

Many Singapore residents would be better off if in some regards the country were not so nice.

That is a hard problem to solve, but in some ways a nice problem to have.

Happy Birthday Singapore!

1 Art Deco August 8, 2015 at 12:15 pm

But but but trillion dollar bills on the sidewalk.

2 Jan August 8, 2015 at 2:16 pm

Give me that money, lah! My daughter need Versace.

3 Axa August 8, 2015 at 4:09 pm

+1 for quoting Moses 😉

4 Warren August 9, 2015 at 2:15 am

Ludwig von Moses?

5 The Original D August 9, 2015 at 1:02 pm

No gum though.

6 ET August 8, 2015 at 12:23 pm

It seems like most of problems faced there are the same as those in any other growing metropolis exacerbated by the fact that the cheaper areas to live are in another country instead of another borough.

7 msgkings August 8, 2015 at 6:22 pm

This. Kind of simple really.

8 Stephen Smith August 8, 2015 at 12:24 pm

Maybe if the government allowed more housing production – and allowed someone other than itself to build it – Singaporeans would be a bit less hostile to immigration.

I keep waiting for you to mention and analyze Singapore’s bizarre socialized-but-with-ownership housing model in your posts about it, and it never happens.

9 Doug August 8, 2015 at 12:33 pm

Great point. Maybe with some more knowledge of real estate economics can correct me, but absent building restrictions isn’t the long term cost of housing just the marginal cost of constructing another floor? Since average square foot costs actually seem to go down until the 50th floor or above (Hanson had a post about this a while back), why would population drive costs except for supply restrictions?

10 Floccina August 9, 2015 at 6:16 pm

+1

11 The Anti-Gnostic August 8, 2015 at 1:04 pm

Yglesian economics: if we only allowed more housing units, then struggling journalists could finally afford to live in Tribeca!

People pay for lower density and living space. That’s why Zuckerberg bought 1,000 acres in Hawaii and five houses around himself in Palo Alto. That’s why Seaside FL looks the way it does and Charleston SC hasn’t bulldozed its Battery to build a bunch of 30 (50, nay, 100!) story condos on the waterfront. That’s why the San Francisco peninsula has a bunch of strategically-located state parks. The idea that EVERYBODY can live in a nice neighborhood by building a bunch of high-rise apartments in the nice neighborhood is pure fantasy; the people who made the place nice will just move away to the next nicer place.

If anybody can live in a nice place, then anybody will, and the place will no longer be nice. This is the fundamental reality which Open Borders fanatics pretend does not exist.

12 Doug August 8, 2015 at 1:18 pm

You’re attacking a straw man. Singapore’s population composition, well designed immigration system and ultra effective policing, means there’s not any undesirable population base like in the US. I agree if you build a bunch of apartments in TriBeCa that rent for 400/month, the Bronx will move in. But there are no Bronxites in Singapore.

And yes, very wealthy people will want to live in medium density neighborhoods. But no ones saying everywhere on the island has to have ultra density. You can keep neighborhoods that look like Pacific Heights, and then build up in SoMa. That retains the ultra prestige real estate, but provides an escape valve for 20 something’s trying to start a family (which the low fertility country desperately needs). Even if a third of the island was develed with Kowloon density, that’s a tremendous relief on housing costs for the middle class.

13 Art Deco August 8, 2015 at 1:29 pm

Pre de Blasio, the Bronx wasn’t that bad. The worst neighborhoods in New York were Ocean Hill – Brownsville and Bedford-Stuyvesant in Brooklyn, and even these had homicide rates only about 20% above the citywide means in Rochester and Buffalo. It doesn’t matter if Bronxites move in if you have vigorous law enforcement and landlords can make use of rapid process to evict problem tenants (e.g. ones who piss in the vestibule and do not pay their rent on time). Deal with the obnoxious poor and the rest of the poor are not a problem.

14 Doug August 8, 2015 at 2:00 pm

If you adjust for demographic composition, the most effective law enforcement in North America is done by redneck Southern sheriffs. Given this, effective law enforcement isn’t rocket science, it’s pretty much just the cops finding shady characters and saying “boy, what’ya doin’ in this neighborhood, this time of night?” Giuliani and Bloomberg’s genius was that they were able to turn the NYPD into a posse of Southern sheriffs while pretending that the crime stat reductions were achieved by Freakonomics-esque wizardry. Precincts that are relatively low-crime in NYC would be explosive war zones if policed in any other Northern liberal city.

I think this is why the Bronx hasn’t been gentrified at all, even though many areas are now fairly livable. New Yorkers, especially those born before 1975, fear a “return to normality”, especially post de Blasio. The Giuliani miracle comes with an expiration date, once the do-gooders figure out what’s really going on, then it’s the apocalypse: back to the crack wars. I agree with what you’re saying, but this is the central problem with your prescription. Any city can implement vigorous law enforcement, but its extremely difficult to earn the credibility that it will stay vigorous over the typical lifetime of a real estate investment.

15 The Anti-Gnostic August 8, 2015 at 2:00 pm

Of course they’re a problem. That’s why rich white people pay hundreds of thousands of dollars to live around other rich white people.

16 Art Deco August 8, 2015 at 3:13 pm

If you adjust for demographic composition, the most effective law enforcement in North America is done by redneck Southern sheriffs.

In your imagination.

17 Art Deco August 8, 2015 at 3:14 pm

Any city can implement vigorous law enforcement, but its extremely difficult to earn the credibility that it will stay vigorous over the typical lifetime of a real estate investment.

If I’m not mistaken, owner occupied housing tends to turn over about every ten years on average.

18 Art Deco August 8, 2015 at 3:17 pm

Giuliani and Bloomberg’s genius was that they were able to turn the NYPD into a posse of Southern sheriffs

You not only drank the Sailer Kool-Aid, you boiled it down before imbibing.

19 Doug August 8, 2015 at 3:23 pm

“I obtained the crime rates and ethnic percentages of America’s larger cities from official government data sources and calculated the population-weighted cross-correlations… [I]n the case of blacks, the weighted crime correlations have steadily risen from 0.60 to around 0.80 or above, almost always now falling within between 0.75 and 0.85… If we examine the 2011 homicide rates for our set of sixty-six large cities, seventeen of these were at least 30% below the projected trendline, with four cities—Charlotte, Raleigh, St. Paul, and Virginia Beach—achieving even better results than New York City… One intriguing fact is that although fewer than one-third of the all our large cities lie in the South, these Southern cities account for over two-thirds of those particularly successful examples, and a roughly similar pattern applies both for other crime rates and for other recent years.”

http://www.ronunz.org/2013/07/20/race-and-crime-in-america/

20 Art Deco August 8, 2015 at 3:28 pm

Charlotte, Raleigh, and the Virginia tidewater are your idea of where rednecks congregate?

21 Doug August 8, 2015 at 4:03 pm

Of the 65 largest American cities making up the above link, yes those are definitely among the most redneck of the group. If you want to examine crime control in really redneck areas you have to go outside large cities, since almost by definitely rednecks don’t live in large cities. The state of Mississippi certainly makes a good candidate. Its homicide rate is 6.5/100k with a 37% black population. The borough of Brooklyn has nearly identical stats: 6.4 homicide rate with a 34% black population. In aggregate Mississippi sheriffs seem to police just as effectively as the lauded NYPD, with I’m sure only a fraction of the resources.

But again, even just looking at large cities, Southern ones are twice as likely to have below trend crime as other American cities. When I think of Southern law enforcement the most salient attribute is being staffed with rough-riding hicks. But maybe you have an alternative explanation?

https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population
http://www.deathpenaltyinfo.org/murder-rates-nationally-and-state

22 John Thacker August 8, 2015 at 4:22 pm

But again, even just looking at large cities, Southern ones are twice as likely to have below trend crime as other American cities. When I think of Southern law enforcement the most salient attribute is being staffed with rough-riding hicks. But maybe you have an alternative explanation?

Well, of the cities you listed, note that Virginia and North Carolina all ban police unions from collectively bargaining, and the other three states that do so are Georgia, Tennessee, and South Carolina. When I think of Southern law enforcement, the most salient attribute is not being subject to police unions.

23 John Thacker August 8, 2015 at 4:24 pm

Here’s the CEPR report on regulation of public sector workers’ collective bargaining.

24 Doug August 8, 2015 at 4:47 pm

@Thacker,

Interesting and plausible hypothesis. I’ll have to look through the report. Thanks for the data.

25 The Wobbly Guy August 8, 2015 at 11:08 pm

I don’t get your point. The middle class, stuck in high density housing, have ‘what’ escape valve? The extra space freed up by high density housing? Oh, sure we have some nice parks, but I think the escape valve theory doesn’t work because our fertility still sucks.

Part of the problem is also that in Singapore, we have no idea how much the HDB spends to build our public housing, so we’re unsure of just how much we are being taxed or subsidised when we pay them for our flats. Perhaps if the true costs are reflected in their sales to the public, a more accurate adjustment to boost fertility rates could be made.

26 Art Deco August 8, 2015 at 1:20 pm

The entire non-agricultural population of the United States could be housed in settlements with a mean density of an ordinary suburban tract (say, 2,300 persons per square mile) and 96% of the land area would be unoccupied bar by farmers, ranchers, fishermen, and foresters. A land deficit per se is not a problem for the United States, or, really, any ordinary occidental country. It’s a problem for people who aspire to live in Monaco.

High rises are characteristic of central business districts. Even a place as dense as Manhattan could get by with the five-story apartment bloc as the bog standard type of residential building.

27 Doug August 8, 2015 at 1:35 pm

I agree wih you, but I’ll point out that the archetypical Manhattan skyscraper exists as an office for a worker commuting in, or a hotel for a tourist or business visitor. The median floor that the typical Manhattanite lays his head down at night is probably not much higher than 5.

28 Art Deco August 8, 2015 at 2:45 pm

He brought up high-rises and name-checked Matthew Yglesias. His fallacy, not mine.

29 The Anti-Gnostic August 8, 2015 at 1:53 pm

Yes, I have seen the argument ad infinitum: the entire population of the US could fit in comfortably in _______ County, USA. It is a stupid argument. People and locations are not fungible, which is why homeowners aren’t saving hundreds of thousands of dollars by buying cheap houses in Detroit or Wisconsin.

Most people don’t like living in termite colonies. In-town populations tend to be transient and even the wealthy ones often have mountain or beach properties.

30 Art Deco August 8, 2015 at 2:43 pm

It is a stupid argument.

No, it’s not. It’s an argument making use of arithmetic inconvenient to you.

People and locations are not fungible, which is why homeowners aren’t saving hundreds of thousands of dollars by buying cheap houses in Detroit or Wisconsin.

You have an inclination to offer transparent red herrings. People are not moving to the Detroit municipality because there has been a breakdown of order there and a catastrophic loss of quality of life. These observations do not apply to new tract development in Oakland County or Macomb County and only small slivers of existing countryside have to be converted to tract development to house new arrivals. The same observation applies to just about any city in the United States as long as you do not have troublesome physiographic features which inhibit construction. The notion that ‘overpopulation’ is a problem, whether it be posited to be derived from immigration or anything else is just tommyrot.

31 The Anti-Gnostic August 8, 2015 at 3:00 pm

Again, people aren’t arithmetic. There is lots and lots of empty acreage in upstate New York. Probably room for every Haitian, Somalian and Liberian who wants to move to the US up there.

32 Art Deco August 8, 2015 at 3:27 pm

There is lots and lots of empty acreage in upstate New York. Probably room for every Haitian, Somalian and Liberian who wants to move to the US up there.

A perfectly irrelevant point.

33 The Anti-Gnostic August 8, 2015 at 3:54 pm

The point is a lot of empty land isn’t remunerative, which is why it’s empty. The other is, people aren’t fungible which is why you pay more for white neighbors. So the idea that housing will be more affordable if we just build more of it is stunted.

34 The Original D August 9, 2015 at 1:05 pm

Where would they work? What would traffic on the commute be like?

35 Art Deco August 8, 2015 at 1:25 pm

No, people who seek out low density pay for low density. People who seek out amenities which require intense agglomeration will pay for those amenities.

36 John Thacker August 8, 2015 at 4:25 pm

If anybody can live in a nice place, then anybody will, and the place will no longer be nice. This is the fundamental reality which Open Borders fanatics pretend does not exist.

This is why you support banning people from moving from the state or city of their birth, right?

37 The Anti-Gnostic August 8, 2015 at 4:42 pm

Try to stay standing up for this one: You don’t have a right to move. You can only move where the owner of the property and the intervening owners allow you to move. And if they disagree, you will either have to buy them off or stay put. ISIS, for example, will just have to stay put.

38 Martin Cohen August 9, 2015 at 1:05 pm

ISIS seems to have a third solution.

39 Ray Lopez August 8, 2015 at 12:40 pm

Singapore is fine until you step outside the state-mandated limits, such as for example you smoke a joint. Then the entire state apparatus comes crashing down on your head. If that’s your idea of paradise, go for it.

It does offer ‘security’ for the super-rich (who fear kidnapping) and I’m sure at their level they can ‘bend the rules’. But for ordinary 1%-ers like me (minimum net worth of $8M USD) there’s more attractive places to live in the world.

40 Doug August 8, 2015 at 4:20 pm

With the exception of Hong Kong, there’s nowhere East of Tel Aviv that’s both developed and tolerant of someone smoking a joint. Singapore’s drug policy is frequently cited as an argument against its political structure, but even the highly democratic states of Japan, Taiwan, and South Korea have similarly draconian drug laws. Its a result of long-seated East Asian cultural attittudes, not its post-independence political evolution.

41 John Smith August 9, 2015 at 12:06 am

Don’t oppose the State then? Seems simple, really.

42 gjk August 9, 2015 at 11:56 am

Why would anyone want to live in a police state?

43 Martin Cohen August 9, 2015 at 1:07 pm

Safe. Cozy. Less thinking.

Especially if you agree with the police.

44 Damien August 8, 2015 at 12:44 pm

“While most Singaporean households own their living quarters”

Technically, don’t they just have a 99-year lease on the property, at the end of which their living quarters will revert back to HDB? For current owners, this may feel a lot like ownership, at least if you’re in a reasonably new building, but the consequences for intergenerational wealth transfers are quite different. The kids will not inherit a flat, they’ll inherit the right to stay in that flat for a few decades at most, perhaps a few years if your parents lived in one of the older developments.

45 ohwilleke August 10, 2015 at 6:23 pm

Agreed. Home ownership in Singapore is more a PR initiative of a country in which everyone rents from a single landlord than it is reality.

46 James H August 8, 2015 at 12:46 pm

“Eventually this stock of housing wealth will be inherited”

Nope. About 99% of the eighty to ninety percent home ownership you quote is in the form of the 99 year lease hold properties. Increasingly retired folks are selling off their bigger houses in better neighborhoods to move into to smaller ones in ageing (less expensive) housing estates to support themselves into their increasingly longer lives. The residual value left on some of these properties is going to be little or no value for the inheritors.

I lived in Singapore as a permanent resident for 16 years. I left the country two years back. I love the place for many of the same reasons that you do. But your consistently one-sided and glowing references about the country have left me wondering if you really know Singapore.

47 Anon August 8, 2015 at 2:46 pm

+1

I had the opportunity for a good job in Singapore. Visited at the invitation of my Boss and the negatives from seeing pedestrian traffic controlled in the airport terminal ( people going one way held back till people going the other way go…..don’t civilized people manage on their own in other airports, without being controlled by police?), cars costing 4 times what they do in the US because of Tax ,the high-density housing , a colleague mentioning he has to wait for 2 trains to go by before he can squeeze himself in the third…all this put me off.

48 Al August 8, 2015 at 8:46 pm

It sounds like you’re saying that being forced to live in a high population density place, even if it’s a modern utopia like Singapore, has significant economic costs, at least for some people.

And yet, I hear this argument sometimes: cramming more people into a city or a country has no economic downsides because it increases GDP.

49 ohwilleke August 10, 2015 at 6:24 pm

+ 1

50 Benjaminl August 8, 2015 at 1:02 pm

but I was told that only a bigot would oppose Open Borders.

Singapore needs to check its White Privilege and make room for a few freighters of Somalis.

51 Kris August 8, 2015 at 1:39 pm

Is there any reason for the conversation to perennially oscillate between Open and Closed borders? How about Controlled Semi-Permeable Borders?

52 Al August 8, 2015 at 2:03 pm

It appears to me at least that, in the US, the debate always seems to come down to that fact that, no matter what set of rules and enforcement regime is created, some group of real world migrants will defy them. (Some of them may well be sympathetic people. But they’re poor and will most likely impose additional costs on state/local governments. They’re also people who have demonstrated that they are willing to defy regulations if they think it will benefit them personally.)

Anyway, once that happens, a group of idealists/activists/advocates for those migrants will shout emphatically that you’re a bad/stupid person if you think those migrants should be denied legal permission to remain in the country.

So, the debate always reduces to:

“Open Borders” vs “You’re Dumb and Bad for Resisting Open Borders”

And here we are.

53 Kris August 9, 2015 at 5:57 am

That’s a good explanation. Also note the very curious position held by Bernie Sanders and his like: to oppose significant amounts of immigration on the grounds that newcomers will compete with existing workers and lower wages, while simultaneously supporting legalization of illegal entrants on the grounds that they are in unfortunate situations (that’s very Marxist thinking, to conflate misfortune with virtue).

As for people advocating Open Borders, it seems to me they only want everyone to concede the principle of open borders: that anyone who wants to or needs to should be allowed to move across national borders. Most likely they will be against sudden deluges of migrants, especially to their home countries.

54 Chuck August 8, 2015 at 3:05 pm

A large portion of the population was not born in Singapore.

55 Art Deco August 8, 2015 at 1:08 pm

The country has severe fertility deficits, but a huge pool of ethnic Chinese from other parts of the Far East on which to draw. They might be able to get by in the future handing out 25,000 settler’s visas per year, limiting entry to the queue to those who can pass a written and oral examination in Mandarin or in one of the major south Chinese dialects, pass a physical, and pass a background check. The stock of temporary residency permits might be fixed in number and distributed by auction from amongst applicants who’ve passed a written and oral examination in one or another local language, a physical, and a background check.

While we’re at it, the place as we speak is less densely populated than New York’s outer boroughs.

56 collin August 8, 2015 at 1:24 pm

Isn’t this the same basic problem of San Francisco, New York, Fairfax County, Paris London and LA? It is so expensive to live.

Also with Singapore, if it such a great place to live, why don’t more citizens feel comfortable having larger families? Singapore hits me as the greatest example of the developed world biggest contradiction is the richer we become, the less we can afford children! And is the population growth the one variable that will effect the AD and AS curves the most? Without population growth how do you increase either curve in the long run? (For example, just think how much the crisis Ukraine and Greece would be improved if they had higher populations?)

57 The Anti-Gnostic August 8, 2015 at 3:42 pm

The response of K-selected populations to crowded, expensive living is going to be less children. As the country becomes less crowded and expensive, birthrates will rise.

58 Thiago Ribeiro August 8, 2015 at 5:13 pm

“For example, just think how much the crisis Ukraine and Greece would be improved if they had higher populations?”
Yeah, the Germans would love having even more Greeks it needs to support … And unless we are talking about using Ukrainians as cannon fodder to delay the Russian Army marching over Europe, I am not sure which problem has as answer “More Ukrainians”.

59 Thiago Ribeiro August 8, 2015 at 1:28 pm

Maybe Singapore’s government should be less competent. We, in Brazil, can help i5 with that, we have a large experience with government incompetence, we can tutor Singapore and create synergy by matching externalities and aligning our core businesses.

60 Harun August 8, 2015 at 5:10 pm

“The Brazilian incompetence consultant called and said he’ll be late for the initial consultation meeting.”

61 Thiago Ribeiro August 8, 2015 at 6:46 pm

“He said his secretary misfiled his proposal and he forgot to renew his passport. Anyway, he is leaving on mandated year-end vacation right now, but he thinks he will be back after Carnival (February). He will be calling after the Easter holidays to try to set a tentative date for starting negotiations to set a provisional date for the initial consultation meeting. Any date after Rosh Hashanah will probably be fine.

62 Doug August 8, 2015 at 1:28 pm

This is a relatively unique problem to the current point in human history. Prior to 1945 the best run governments tended to expand their territory at the expense of the poorly run ones.

63 Tom Warner August 8, 2015 at 1:52 pm

For the city states of Singapore and Hong Kong, I think it’s much more sensible to compare their GDP to other major metropolitan areas, rather than to other whole countries. By that measure Singapore’s GDP/capita of about $51k is fairly middling and nowhere near any of the major US metro areas.

Unfortunately the BEA doesn’t produce a clear presentation of US metro area NGDP/capita. Instead, weirdly, it produces a table of RGDP/capita in chained 2009 dollars. The latest data is for 2013. Here’s some examples:

Silicon Valley $100k
Stamford $93.4k
San Francisco $78.8k
Seattle $74.7k
Boston $74.6k
Washington $73.5k
Houston $72.2k
New York $69.1k
Portland $68.8k
Denver $61.6k
Dallas $60.7k
Philadelphia $59.3k
Los Angeles $59.1k
San Diego $58k
Chicago $57.8k
New Orleans $56.9k
Atlanta $52.2k
Cincinatti $52.1k
Detroit $49.7k
St Louis $48.7k
Miami $45.1k

To translate those into 2015 NGDP/capita I would add about 15%, putting Miami metro at about $52k, Philiadelphia about $68k, New York about $79k, and DC/Seattle/Boston around $85k

The data is here: http://www.bea.gov/iTable/iTable.cfm?reqid=70#reqid=70&step=6&isuri=1&7003=1000&7004=naics&7005=1&7001=21000&7002=2&7090=70

64 Randall Parker August 8, 2015 at 1:57 pm

Detroit met must include the suburbs. I’d rather live in Singapore than Detroit (or other battle zones).

65 Doug August 8, 2015 at 2:08 pm

> I think it’s much more sensible to compare their GDP to other major metropolitan areas, rather than to other whole countries.

No this is a bad comparison. Large cities in the US attract the most intelligent, educated and talented workers relative to smaller cities and rural population zones. They also have much higher labor force participation, because typically the elderly, children, students, the infirm, housewives, etc tend not to live or work in metro cores. There’s a natural GDP sorting provided by migration. While Singapore does have immigration and emigration the rates are much lower than intra-national migration in the US. Silicon Valley wouldn’t have extremely high GDP if it had to essentially constrain its worker population to those born in the South Bay.

66 Art Deco August 8, 2015 at 3:11 pm

Large cities in the US attract the most intelligent, educated and talented workers relative to smaller cities and rural population zones.

I think the only thing which would usually be missing from a 2d tier city (larger than Dayton and smaller than Denver) would be a corporate or guild elite, and not even that reliably. University hospital complexes are found reliably in any dense settlement exceeding 600,000. In most countries, bourses are nearly unique and found only in the financial capital. The U.S. is large enough that these are divided between New York and Chicago, with other cities (e.g. Minneapolis and L.A.) having a slice of the pie. Corporate headquarters gravitate to the coasts, but you can find them elsewhere; Procter and Gamble is headquartered in Cincy and WalMart in Bentonville, Arkansas. Private research universities tend quite strongly to be in large cities; state legislatures have seen to it that academic elites are more distributed.

67 Doug August 8, 2015 at 3:40 pm

I’d say the largest difference between second and first tier cities would probably be “business services.” Big law, investment banking, accounting firms, insurers, management consulting, IT services, logistics firms, corporate travel agencies, etc. These are still high-paying/productivity industries, but less so than the winner-takes-all ultra-competitive fields like hedge funds, software developers or movie studios. The latter are going to concentrate in “crown jewel” cities like New York, San Francisco or London. But business services tend to be prestigious but less differentiated. A fairly renowned regional accounting firm or investment bank can win clients from the more prestigious but distant competitors in DC or LA. Then again, these are far from purely commoditized businesses, and you’re not going to pick a consulting firm from Hicksville, Nowhere. You end up seeing big drop off in corporate lawyers when moving from Cleveland to Toledo.

68 Tom Warner August 10, 2015 at 6:37 am

While much of what you say is overstated for American big metro areas, almost all is more true for Singapore. It receives many more elite immigrants than any major US metro area. Only the specialist areas of Silicon Valley or Stamford could compare on that.

69 Randall Parker August 8, 2015 at 1:56 pm

I hear The Eagles: “Call some place paradise, kiss it good bye”.

The natives need offspring genetic engineering to allow them to compete with high cog immigrants.

70 Doug August 8, 2015 at 2:08 pm

Or just breed with the immigrants.

71 The Anti-Gnostic August 8, 2015 at 2:19 pm

But nobody really believes in frictionless competition, not even the GMU Econ Department. They impose barriers to entry and pull the drawbridges up whenever and wherever they can. But the average schlep isn’t smart enough to belong to a competitive, highly-credentialed guild; all he’s got are the country’s borders.

The bargain is supposed to be his elites protect him from the global race to the bottom for wages, and he agrees to pay his taxes, obey the laws, even fight in the military to protect his country’s way of life. Otherwise, what’s in it for him? Why should he pay taxes or fight and die for the territorial and cultural integrity of Ukraine, Kosovo, Poland or South Korea when his own country is just lines on a map?

Thus, the appeal of somebody like Donald Trump. The bourgeois and proles know in their bones that their elites despise them and want them replaced.

72 Chuck August 8, 2015 at 3:08 pm

There’s no agreement between rulers and ruled. The strong rule because they can. The weak submit because they have to.

73 Al August 8, 2015 at 3:19 pm

“Otherwise, what’s in it for him? Why should he pay taxes or fight and die … when his own country is just lines on a map?”

Interesting.

74 Harun August 8, 2015 at 5:14 pm

And how does he feel when political parties decide he’s not reliable enough, so we’ll bring in new voters to replace you?

I bet it must feel like the boss forcing you to train your H1B1 replacement.

75 AlexR August 8, 2015 at 2:26 pm

Rising land values are not a problem; they signal higher value to proximity. People will respond to that signal by re-evaluating whether their own valuation of proximity now falls short of the market value. If Fairfax becomes like Beverly Hills and you don’t benefit sufficiently from proximity to the new glamor, you’ll move. And this is true whether you rent or own property — the increased cost of proximity may be either direct in rent or a foregone opportunity to sell.

Perhaps you’re pointing to a political problem, that non-citizens gain disproportionately from increased land values, making the decisions that drive the increases politically untenable in a longer run. That may or may not be true. If it is true, it indicates a cost of democracy: supporting efficient policies may require a redistributive property tax to buy off the citizenry, who are effectively shareholders in the country.

76 The Anti-Gnostic August 8, 2015 at 2:34 pm

Or, just replace the citizenry.

77 Sean Brown August 8, 2015 at 2:49 pm

Yes, redistributive property tax + use the proceeds to build public transit to support more infill and density (to allow more housing units) and 0-car households. The congestion charges are a good step in this direction. Alas Singapore does not have a public transit system on the level of Seoul or Tokyo which allows all levels of society to benefit from increased tax base,and to somewhat equalize those who can’t afford to rent or buy in high-price districts.

78 Chuck August 8, 2015 at 3:01 pm

No problem at all. The losers can flee to where the competition is less fierce. Singapore has always been a city of transients so it will be no big loss.

79 Art Deco August 8, 2015 at 3:02 pm

Not really. You’d be hard put in a city of ordinary size to find a neighborhood predominantly populated with ‘rich people’, i.e. a neighborhood dominated demographically with people whose assets rendered them among the 2% or 3% most well-endowed households. The Hamptons might quality. However, the low density tracts and discrete small towns of Suffolk County, N.Y. have a population just north of 100,000 adjacent to a dense settlement which sprawls over 19 counties in New York and New Jersey and has a population of 18 million. Where I grew up, a burgh which has about 600,000 people in it all told, there are two suburban townships which comprehend maybe 11% of the population of the whole settlement which are strongly biased in their composition toward professional-managerial bourgeois. Even in those townships, you can still find apartment blocs here and there or modest housing occupied by old families who date from the pre-suburban era. Other suburban townships and most city neighborhoods have people from every stratum except the slum population. The balance between stratum varies from one township to another and from one section of the city to another, as do the position exemplars of each occupy in the life-cycle. In some neighborhoods, for example, impecunious people tend strongly to be young people just starting out and old people whose main income is Social Security. This is even more so in small towns, where you have people from every stratum quite proximate to each other (and no slums, just trailer parks on the edge of town).

80 jorod August 8, 2015 at 4:28 pm

The US should have such problems. How do we boost Mexico to a responsible, self-supporting country status.

81 Art Deco August 9, 2015 at 9:14 am

Mexico is is a middle-income country with 118 million people in it and a 95 year history of unbroken institutional continuity. It has not suffered an insurrection of note since 1929, concluded its last civil war in 1920, and (leaving aside some peripheral participation in the 2d World War), has not been a party to an inter-state war since 1848. The overseas development aid it receives is close to nil. How does it qualify as mendicant or ‘irresponsible’?

82 jorod August 9, 2015 at 9:26 pm

Yes, they are flooded with well off US retirees looking for cheap cost of living. I can’t say the reverse in the US.

83 ohwilleke August 10, 2015 at 6:49 pm

Mexico is in the midst of an insurrection and has been some almost a decade. The State of Chihuahua has the highest murder rate of any political jurisdiction in the world that has not formally been described as at war. The “drug war” there, in which the military is a party, is more than a metaphor, more than 47,500 people died in the conflict from 2006 to 2012 and the body count had continued to grow since then. The struggle to maintain a functioning system of law and order is seriously imperiled with some towns having a list of dead sheriffs to rival any hyperbolic movie Western. Less than a year ago, it was discovered that an incumbent small town politician ordered a drug gang at her disposal to massacre a bus load of trainee school teachers who were headed to a rally to oppose her election campaign and the order was carried out.

There have also been genuine ethnic nationalist insurgencies in Oaxaca and Chiapas which have been hot within the last twenty-five years. A rebellion by the EZLN was resolved by a treaty in 1994, and guerilla attacks were carried out by the Popular Revolutionary Army in 1996. It has had institutional continuity yes, but for most of that time period, it was a non-democratic dominant party system, and its transition to a multiparty system starting in the 1990s has been turbulent and fragile. There was a PRI president in office at all times from the 1920s to 2000. Corruption that has carried over from that era remains rampant.

I wouldn’t call it mendicant or irresponsible, but to say that it has been at peace since 1929 overstates reality on the ground, and Mexico is struggling a great deal as state owned oil production declines and its economy seeks to backfill this with manufacturing (which NAFTA has helped), and with a big investment in higher education (with higher education completion rates now exceeding many U.S. states).

84 Phil August 8, 2015 at 4:41 pm

Singaporean creatives aren’t going to decamp to Malaysia for lower costs. They would go to Bangkok (this is already happening) or to Brooklyn/Berlin like other developed world creative types are doing.

85 ravana August 8, 2015 at 5:25 pm

Really Bangkok? I would think it’s more likely Melbourne.

86 rayward August 8, 2015 at 5:53 pm

I have a home in fly in-fly out America (as opposed to fly-over America). It’s a nice place, the kind of place that wealthy people would choose to have one of their many homes. And they do. For generations the nearby locals provided the service jobs, an arrangement that worked well for both the fly-in and fly-outs and the locals. Not any more. The locals expected too much. Now the services jobs are filled by young men and women from eastern Europe and South America, flown in and housed by the fly-in and fly-outs, and who are pleased with their good fortune and don’t complain. It’s a fine arrangement. For the locals, not so much.

87 Anon August 8, 2015 at 7:24 pm

Can you clarify further? What is this location?

88 Doug August 8, 2015 at 10:34 pm

The alternative explanation is that the native white working class simply stopped being employable. Just check out the local talent in Western Massachusetts, Southern Ohio or Inland California. When they’re picking up their SS disability benefits they’re zonked out on Jack Daniels and Oxycontin. Say what you want about Central Americans, but they show up to work on and reliably. That used to be true of -1sigma Americans, but it’s definitely not the case in 2015.

89 Art Deco August 9, 2015 at 9:46 am

The alternative explanation is that the native white working class simply stopped being employable. Just check out the local talent in Western Massachusetts,

The employment to population ratio in the four counties of western Massachusetts as assessed in 2013 and 2014 was 0.429. That nationally is as we speak 0.438.

90 anon August 9, 2015 at 2:23 pm

A couple summers ago in the rural Midwest, I talked to a former high school friend who was doing roofing and other contracting labor. His boss had plenty of white guys willing to do this temporary, back breaking work for under $10 an hour in the heat. My friend buried himself trying to keep up with his bigger/stronger coworkers. There are no Latin Americans where he lives.

91 Warren August 8, 2015 at 7:02 pm

Seems like buying some retired cruise ships and mooring them off the coast would be a way of adding additional apartments.

Subject to the usual sorts of business analysis’ of course.

92 Doug August 8, 2015 at 10:27 pm

I think it’s more cost-effective to simply add more land a la Holland.

93 Warren August 8, 2015 at 11:59 pm

For the city leaders maybe but not for an entrepreneur looking to make some money.

94 John Smith August 9, 2015 at 12:12 am

Already doing that. The Singapore is significantly larger than it was at independence.

95 Chip August 8, 2015 at 10:31 pm

Singaporean dissatisfaction comes less from lower living standards and more from an increasingly blurred sense of identity as more and richer foreigners arrive.

Singapore has always had a tenuous national identity with people identifying more with ethnicity, clan and family. For example, there’s the paradox of the country’s passion for soccer. Even as more Singaporeans follow the sport, attendance when the national team plays has plummeted from packed stadiums to a smattering of 5000 people or so. Why? The team’s ethnic makeup went from half Chinese to fully Malay. The majority Chinese country would rather turn out for Arsenal – sold out the national stadium recently – than their national team. They will cheer lustily for Arsenal over their national team.

Despite unremitting government programs to stiffen a nationalist identity and the two year social engineering scheme that is conscription, Singapore is really a loose grouping of ethnicities, which is further muddied by westernized Chinese versus clan or heartland Chinese and the 10% that are Indian or Tamil..

These divided loyalties have been further stretched by the wealthy foreign arrivals so that lower income Singaporeans are feeling extremely uncertain about their place in society, even as their wealth increases.

96 Doug August 8, 2015 at 10:38 pm

> For example, there’s the paradox of the country’s passion for soccer. Even as more Singaporeans follow the sport, attendance when the national team plays has plummeted from packed stadiums to a smattering of 5000 people or so.

This doesn’t sound too different than most of the American sunbelt. Go to a Devil Rays baseball game or a Cardinals football game and its not unusual for more than half the stadium to be rooting for the visiting team.

97 Chip August 8, 2015 at 10:42 pm

It’s really just a status problem. While Singaporeans absolute wealth as increased a great deal their relative sense of status has diminished, because media and awareness have illustrated the differences with others and many foreigners are very rich.

98 The Wobbly Guy August 9, 2015 at 12:10 am

Support for the national football team was strong twenty years ago. It fell off when we withdrew from the Malaysia Cup and League and decided to focus on our own local S-League. It was difficult to raise and sustain local support for teams on such small regions though, so local football has essentially collapsed.

As for identity, hardly anybody self-identifies as clan vs westernised vs heartland chinese. These distinctions don’t even exist. What does exist is the usual socio-economic segregation that is perpetuated by the various local institutions. Some of Charles Murray’s ideas in his book Coming Apart can be evinced in Singapore, where our small size exacerbated the social processes he identified. The principal of arguably our best school spoke of this recently.
http://www.tremeritus.com/2015/08/07/principal-agrees-ri-is-elitist/

99 Chip August 9, 2015 at 2:35 am

“These distinctions don’t even exist.”

Heartland must be a figment of my imagination, even though the term is used widely. Same goes for ah bengs, ah lians and other characters.

Singaporeans rarely associate across class lines. An owner of a hawker stall or delivery driver wouldn’t be at a dinner party with a lawyer and banker. In Canada it happens all the time.

The distinction is that some are westernized and others are not. The schools and Christianity play a big and growing role in this process.

100 Art Deco August 9, 2015 at 9:22 am

An owner of a hawker stall or delivery driver wouldn’t be at a dinner party with a lawyer and banker. In Canada it happens all the time.

Rubbish.

101 duxie August 8, 2015 at 10:46 pm

BBC podcast on Singapore at 50 http://www.bbc.co.uk/programmes/p02ybvlm

There is a gap between the ruling classes and the lower level of the population. Although competition is good but it is no fun if you or your children are disadvantaged. Considered the PISA scores (converted to IQ scores) between the local students and the children of the immigrants,

country IQNative IQ2ndGenImm IQ1stGenImm

Singapore 107.0 110.8 106.9

The intelligent faction for the local is at 50% mark. The competition is very intense. Hence many local thinking of emigrating.

102 tony cohen August 8, 2015 at 11:14 pm

I live in Singapore. Would love to get a beer with other MR’s who don’t mind the high sin taxes…

103 The Wobbly Guy August 8, 2015 at 11:41 pm

“I once argued that some parts of the Singapore arts community will end up priced into southern Malaysia; not every Singaporean I spoke to was happy to hear this.”

And who would they cater to there? The biggest reason why the arts scene in Singapore is barely sustaining itself is because they have almost nowhere else to go in the region. Malaysia is a desert, ditto for Indonesia. We’re not like the UK, with a large population of its own, culturally ready audiences, and more markets nearby in Europe.

“One of the most important questions the two governments face is just how easy to make that border crossing. Right now it is “doable” but could be much easier, given the underlying wealth and competencies of the two governments.”

That just took a hit with the new tariffs by the Malaysian government. And nobody dares to overestimate the competency of the Malaysian government.
http://transport.asiaone.com/news/general/story/malaysia-expected-levy-740-vehicle-entry-permit-foreign-vehicles-aug-1

“That’s great, but in some ways it makes the underlying problem worse by attracting additional foreign capital and labor. The city becomes more Westernized and more corporate and land values rise all the more.”

We can always control labor. It’s a matter of whether the government wants it or not. The current immigration process is opaque and does not build confidence in locals OR businesses.

“I’ve even heard credible reports that service sector productivity in Singapore is declining, though only slightly.”

When you hire cheap PRC workers who can barely speak English, what do you expect? The rest (including the competent foreign workers) have to work doubly hard.

Regarding fertility, we need to go back to basics – what factors increase fertility? However, I don’t believe the current government views it as important – they benchmark their bonuses to 4 key indicators, which do not include fertility. As we all know, incentives matter. If they want to show they are serious about it, then they should benchmark their bonuses to fertility. And maybe then we’ll start to see some serious action about it.

104 Art Deco August 9, 2015 at 9:20 am

The biggest reason why the arts scene in Singapore is barely sustaining itself is because they have almost nowhere else to go in the region. Malaysia is a desert, ditto for Indonesia. We’re not like the UK, with a large population of its own, culturally ready audiences, and more markets nearby in Europe.
==

Would a ‘culturally ready audience’ be the sort of people who fancy Martin Creed produces something of value? If that’s the case, why should Singaporeans or Malaysians be embarrassed at lacking it?

http://www.johnderbyshire.com/Opinions/Culture/nincompoopprize.html

105 The Wobbly Guy August 11, 2015 at 1:20 am

Maybe. You need to have low-brow art to have high-brow art. 😉

To get to the good stuff, you often end up with dross. But without the dross, there’s no good stuff possible either.

106 ohwilleke August 10, 2015 at 6:20 pm

Singapore is an authoritarian government, with dramatic suppression of democratic and expressive rights. There are lots of perfectly good reasons for complaints.

Also, the 80%-90% home ownership figure is highly deceptive. The rights incident to home ownership in Singapore are far weaker than the conventional package of a homeowner’s property rights in most of the world. Singapore, ten or twenty years ago, had a population that almost entirely lived in rental units owned by the government. The current regime of home ownership looks more the NYC rent controlled apartments than true home ownership.

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