Crazy rich Asia

In just a few decades, Singapore has caught up with Denmark but economists are divided whether to credit 'institutions' or 'culture'

In the surprise hit movie “Crazy Rich Asians” (based on a 2013 Kevin Kwan novel), a New York University economics professor (Rachel), travels with her boyfriend to Singapore to meet his family. There, she learns, apparently for the first time, that her significant other (Nick) is heir to one of Asia’s largest fortunes and has a mother intent on making sure her son does not marry a commoner, Asian-American or not.

Partly because of its (terrific) all-Asian cast (an extreme rarity), and partly because it recalls earlier eras of great romantic comedies, the film has caused a lot of buzz. Perhaps there will even be a long overdue Oscar for Michelle Yeoh (from “Crouching Tiger, Hidden Dragon”), who plays the steely but loving mother.

But the film also stars Singapore, a place unfamiliar to most Westerners. For some, the real shocker in the movie will be just how crazy rich parts of Asia have become.

Illustration by Binay Sinha

To get a sense of the island city-state’s meteoric rise, one need only compare the glittering metropolis depicted in “Crazy Rich Asians” with the hut-filled fishing village depicted in the 1940 classic comedy, “Road to Singapore,” starring Bing Crosby, Dorothy Lamour, and Bob Hope. The comparison makes it easy to understand how the fictional Young family became ultra-rich as early real-estate investors. With annual output of approximately $325 billion in 2017 and 5.6 million inhabitants, Singapore now ranks with Denmark economically (though its population is more diverse).

This is a flattering comparison, given that Denmark typically ranks at or near the top in global quality-of-life surveys. Singapore does not redistribute income as aggressively as Denmark, choosing instead to maintain lower taxes and concentrate transfers on low-income individuals. Nevertheless, all citizens have access to high-quality health coverage and schooling, and many are also eligible for heavily subsidised housing. In “Crazy Rich Asians,” poverty is depicted (rather ingeniously and hilariously) as a long-haul flight in economy rather than first class.

Although Asian-Americans have embraced the film as a breakthrough for Asian actors in mainstream Hollywood productions, it is hotly debated in Singapore itself. Although many Singaporeans are excited that “CRA” (as it is called in Singlish) will catalyse a tourist boom, complaints are rife. One is that the characters don’t use more Singlish phrases; another is that the city-state’s large Indian and Malay communities are invisible. Most of all, there is a populist backlash against the Young family’s outsize wealth, making some question why Singapore has no capital-gains or estate taxes. Why should Nick be allowed to inherit so much money?

But the backlash is perhaps less than an American or a European might expect. This may be because the middle class has done fairly under Singapore’s unique system, which is very much a market economy, but one where the government plays a big role in long-term planning and investment.

One might cynically say that the backlash would be much more visible if there were less restrictions on the media. But surely slowing growth, especially where it affects middle-class incomes, has been a major driver of populism in Europe and the United States, exacerbated no doubt by the financial crisis. Although Singapore’s growth has also slowed, it still compares favourably to Europe. The Monetary Authority of Singapore is forecasting that growth will exceed 3 per cent in 2018, on par with the United States, which is now the envy of the advanced economies.

Singapore’s success is all the more remarkable given that proximity to the equator is usually associated with weak growth and poverty. Yet Singapore is situated virtually on top of it. (In one implausible scene in “Crazy Rich Asians,” Nick and Rachel are picked up at the airport in an open-air jeep.) Economists who study growth almost come to blows at conferences over whether “institutions” or “culture” are more important to growth, with both sides seeking to take credit for Singapore, which inherited English institutions and elements of Chinese culture.

And now, one hopes, Asia will become a bigger part of Hollywood culture, with more films featuring Asian locales and actors. Produced for just $30 million (compared to over $300 million for Marvel’s “Avengers: Infinity War”), “Crazy Rich Asians” has already grossed over $200 million worldwide.
 

That’s impressive for any film, and perhaps especially for one that opens with a lesson in game theory. In the first scene, Rachel uses poker to illustrate a concept to a large class sitting in rapt attention, and she schools a graduate teaching assistant. Of course, most courses on game theory involve a lot of mathematics about strategic relationships, not playing actual games. But they can be fun all the same. Princeton University Professor Avinash Dixit famously uses clips from films such as “Dr. Strangelove” to illustrate key concepts.

Now perhaps Hollywood will use films such as  “Crazy Rich Asians” to illustrate key concepts about a region that is the biggest economic success story of the last several decades. There are many more stories about that story to be told.

Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University © Project Syndicate, 2018