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.

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About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

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