Crazy, Rich Singapore? Yes … and No

Remember that movie, Crazy Rich Asians ? It opens with a manager of a ritzy London hotel acting snooty to a Singaporean mom and her kids. Why don’t you try Chinatown, the manager tells them, in a fine example of British racist prejudice. Mighty cheesed off, mom calls her husband, who solves the problem – by buying the hotel his family was trying to check into.

That scene tells you everything about Singapore ’s wealth. It reinforced a certain image of the city-state. Singapore – everything’s shiny, everyone’s happy. This is a country where a popular slogan was built around the idea of material possessions. Called “5Cs”, it defined Singaporeans’ aspirations – cash, country club membership, car, credit card and condo. Plenty of people in other countries want/have these things, too. Only Singapore coined a slogan around this.

Plus…

• The weather’s nice. Never too hot, and never cold, thanks to its geography, bang in the equatorial monsoon region of Southeast Asia.
• Singapore’s prosperity is the stuff of global envy. At $141,500, its per capita income in PPP terms (a fairer measure than nominal dollar figures) ranks second after Luxembourg globally. In Asia, it’s the richest country.
• It has the world’s highest concentration of millionaires, meaning the largest number of millionaires per square km.
• It hosts a raft of global companies, who love Singapore’s low taxes, top class infra, hassle-free regulation (it takes a day to incorporate a company).
• The city-state ranks 5th in the list of global startup hubs.

This is by no means an exhaustive list of what makes Singapore tick.

But…Singapore is not all shiny, happy.

A well-heeled visitor driving down a beautiful road from Changi airport to a world class hotel, thence to dine at a world class restaurant (Singapore hosts five of the world’s top 100 restaurants) won’t probably see this, or even know about it – there’s poverty , some of it deep, in Singapore. And it’s a problem likely to sharpen because the city-state, like many rich countries, is ageing.

Poverty line, what’s that?
Most countries define a poverty line, a level of income/expenditure that differentiates the poor from the non-poor. There's a good reason for this. A poverty line allows policymakers to better target those who need the most help. India has a poverty line, so does America, and so do most countries. Singapore doesn’t.

Why? Singapore govt’s approach, as Arabella Woo wrote in a London School of Economics research paper (“Inequality in Singapore: The Hidden Poor”) is “to reward citizens in alignment with the work that is done”. As for economically vulnerable citizens, govt wants “citizens…to protect themselves…to do it themselves”.

If that’s your take on poverty, obviously there’ll be no official poverty line. Naturally, there’s no official count of poor people either.

Reality via research
With govt not defining poverty, researchers have had to work with other data. A superbly researched paper (“A handbook on inequality, poverty and unmet social needs in Singapore”), by Catherine J Smith, John A Donaldson, Sanushka Mudaliar, Mumtaz Md Kadir & Lam Keong Yeoh, quotes a separate study by one of the authors, who had used expenditure survey data. Per that study, “there are 110,000 to 140,000 households in Singapore who fit the definition of absolute poverty…these include the working poor, unemployed poor and poor retiree households”.

Absolute poverty is defined as an economic situation where a person or a household doesn’t earn enough to cover basic needs.

In a small country (population just over 6 million), 140,000 households, that is, around 560,000 people (reasonably assuming 4 people per household), is not a vanishingly small number. You wouldn’t think, visiting Singapore, there are more than 5.5 lakh people living in absolute poverty.

Economists also use a concept called relative poverty – a measure that captures living standard relative to that enjoyed by those earning median wage (a median is defined as the middle value of a sequence of numbers, arranged in ascending or descending order).

By this measure, per the handbook quoted above, 25% to 30% of Singaporeans live in relative poverty. The same research points out that many Singaporean middle-class families have faced “stagnating wages and an increased cost of living”. This double whammy hits middle-classes, and the poor, who are hit harder, in many countries, including India. But it’s also true for that island of gleaming high-rises.

In a report on poverty and inequality in Singapore, BBC said this: “The city-state, which has some of the highest-paid ministers in the world, is a place of sometimes extreme contrasts, with glittering condominiums and towering facades just a stone's throw from one-room rental apartments inhabited by elderly and blue-collar families.”

The same BBC report also quoted two local studies that concluded that in multiracial Singapore, it’s not race but class that’s become the deepest social faultline.

Same old story
Poverty, absolute or relative, and sharp income inequality in Singapore can be traced to pretty much the same set of reasons that’s produced similar outcomes in other countries. Policy attention on maintaining high GDP growth, low corporate taxes to attract investment, an emphasis on meritocracy, and the transition from old economy to knowledge economy. Implemented well, as Singapore govt has, this set of policies can produce shining economic performance – but it can also produce an underclass that gets caught in a deprivation trap. And the problem gets worse, as is the case in Singapore, when a society starts ageing. Elderly poor face the worst kind of poverty.

None of this invalidates Singapore’s success story. But all of it tells us about a Singapore that most people don’t know exists.

To say all Singaporeans are crazy, rich is crazy, and full of rich irony.