Liberals who would call the policies of the Trump administration “nationalistic” as some sort of insult should look around at the examples of other successful foreign cities and countries – particularly in East Asia.
Hong Kong and Singapore are looking to surpass the United States in attracting new wealth over the next few years. This new wave of investment will invariably move jobs away from the United States if our politicians and economists are not allowed to push back and allow businesses to compete in the free market.
Singapore and Hong Kong are actually set to surpass Switzerland at twice the rate of investment over the next four years. The reason? The strategy implemented by both countries is to attract wealth from burgeoning Asian economies. According to the Boston consulting group, Hong Kong will see its offshore assets rise at a compound annual average rate of 7% over the next year, while Singapore will enjoy a rate of 8%. Switzerland, currently the number one wealth management center of the world, will rise only 3% in the same time frame.
Political instability has served as the main driver of offshore wealth movement. Countries that are considered safe will attract wealth, while countries that are deemed unstable will lose it. Switzerland and Singapore have been two of the most peaceful countries in the world. Hong Kong is surrounded by so much new economic activity, that even its political turmoil is not enough to keep away people who are looking for a stable hub.
Why are Hong Kong and Singapore growing faster than Switzerland? There is a great deal of economic growth between China and India, and Singapore is actually becoming a more efficient, independent hub of wealth in the eyes of many international investors. The marketing that the government of Singapore does has struck a nerve with the international community, showcasing the government as a very supportive outlet.
Even as authorities are trying to keep assets from moving offshore, wealthy people are still storing money abroad. Tightening tax regulations has done very little to encourage rich people to repatriate assets. Because of the relative stability of governments like Hong Kong and Singapore, there is very little that other countries can do if the assets of the rich are undeclared.
The banking community is also falling in line with the new trend. DBS Group Holdings Limited, Credit Suisse Group AG and UBS Group AG have all added to their wealth management teams for global clients. The overall market for offshore assets has grown to almost $10.3 trillion.
The United States currently has a federal debt of anywhere between $20 trillion-$90 trillion, depending on who you ask. If the government is missing out on taxes from $10.3 trillion worth of assets, there is very little that government can do to put a significant hole in its debt. This causes governments to tax their citizens more heavily, which definitely does very little for the job market.
Can you imagine what a full-time, established businessman like Donald Trump could do with the taxes from $10.3 trillion? Honestly, this is the first president that we have had who could actually deal with that kind of money. However, American politicians are not united in trying to repatriate these assets. The job creators that build these assets somehow still feel that offshore accounts are a better place for their money. Foreign governments are doing a better job of marketing for American dollars than America itself.
There is no need to try to force anyone to move money back to the United States. Investors go where the economic advantages present themselves. If the United States can convince these people in the free market that America is better for them, they will come back naturally. However, this can hardly be accomplished with the instability in the current American government.
If we do not align our political, commercial and economic interests in the near future, the problem of federal debt in America will continue. The government will have to make up that money by taxing the citizens. Businesses will not be able to compete because of the high taxes, and more assets will be moved outside of the country.
It is time to prioritize our job creators and welcome them back. Otherwise, Hong Kong, Singapore and other countries will benefit from the wealth that American genius has built.
Regards,
Ethan Warrick
Editor
Wealth Authority
