林中斌 部落格 / Blog Chong-Pin Lin

Ruchir Sharma, “The Millionaires Are Fleeing”

New York Times June 3, 2018

*2017年，12%百萬富翁離開土耳其，16%離開委內瑞拉，2%離開印度，2%離開俄羅斯。3,000(以前吸引百萬富翁)離開英國。4,000(2016年12,000離開，更多)離開法國。

*0.2%百萬富翁，9,000移民美國。川普效應?

The Millionaires Are Fleeing. Maybe You Should, Too.

Tracking the rich has become a voyeuristic global industry, a form of celebrity worship. But it can also provide serious clues about where countries are headed.

When a country begins to fall into economic and political difficulty, wealthy people are often the first to ship their money to safer havens abroad. The rich don’t always emigrate along with their money, but when they do, it is an even more telling sign of trouble.

Since 2013, New World Wealth, a research outfit based in South Africa, has been tracking millionaire migrations by culling property records, visa programs, news media reports and information from travel agents and others who cater to the wealthy. In a global population of 15 million people each worth more than $1 million in net assets, nearly 100,000 changed their country of residence last year.

In most countries it is fair to assume that any millionaire exodus is composed mainly of locals, and not foreign investors, because the wealthy classes will be dominated by citizens or longtime residents. In 2017, the largest exoduses came out of Turkey (where a stunning 12 percent of the millionaire population emigrated) and Venezuela. As if on cue, the Turkish lira is now in a free fall. There were also significant migrations out of India under the tightening grip of its overzealous tax authorities, and from Britain under the cloud of Brexit.

On the flip side, slowing outflows can be a welcome sign, and in 2017 the biggest shift for the better came in that caldron of anti-rich hostility, France.

Equally surprising was the lack of change in the United States, where the arrival of a billionaire president did not seem to attract or repel millionaires. A net total of 9,000 millionaires migrated to the United States last year, but they represent a drop in the ocean of five million American millionaires.

Just like the less wealthy, millionaires seemed unsure of America’s direction under an unpredictable president who offers tax cuts and deregulation for the rich, but also bashes foreigners and occasionally talks like a pitchfork-waving populist.

Britain and France appeared to be trading places as magnets for wealth. For decades the rich had been drawn to Britain by circumspect banks, loose regulations and the comforts of London. Until 2016, Britain had a sizable influx of millionaires every year, but the flow suddenly reversed last year with a net exodus of 3,000, amid fears that as Britain exits the European Union, London will fade as a financial capital. It did not help that in 2017 the government raised taxes on foreigners who buy property.

France had long been seen as the anti-Britain, a left-leaning bastion of prying bureaucrats and high taxes that scared off the wealthy, despite the charms of Paris. But the growing exodus of millionaires peaked in 2016 with a net outflow of 12,000, then slowed sharply to just 4,000 last year. The most likely reason: the May election of Emmanuel Macron, the youngest president in French history, who promised a lighter-touch bureaucracy less hostile to business and lowered wealth and capital gains taxes.

Granted, displaced millionaires get little if any sympathy, but no country gains by losing the talent and capital of its wealthiest residents, particularly not emerging countries like India. Stunningly, India in 2017 suffered a net loss of 7,000 members, or 2 percent, of its millionaire population. That exodus came despite global optimism about India’s growth prospects and matched the flight from the stagnant and sanction-battered economy of Russia, which also lost 2 percent of its millionaire population.

This unusual flight from India’s high-growth economy may be driven by the elite’s growing concerns about an official anticorruption drive and “tax terrorism” — unlimited authority given to tax officials to target the rich. Under Prime Minister Narendra Modi, the government has lately begun catering to the nation’s deep socialist streak, wielding state power to flush out and tax hidden pockets of wealth.

In the worst cases, bouts of capital flight can gain momentum until the value of the currency collapses, plunging the nation into crisis. Balance of payments records show that 10 of the last 12 major currency crises, dating back to the Mexican peso meltdown of 1994, began when residents started sending money abroad, which was typically two years before the currency collapsed. Often politicians blamed “evil” and “immoral” foreign speculators for these crises, but it was the locals who first saw trouble coming.

Right now, this forensic accounting offers clear evidence of looming financial difficulty in only one major country: Turkey. Starting early last year, affluent Turks began effectively moving large sums of money out of the country by exchanging their lira bank deposits for dollars and euros, while foreigners continued to buy Turkish assets.

The 12 percent decline in Turkey’s millionaire population last year was by far the largest of any major economy, and second only to the 16 percent decline in Venezuela, with its small, hyperinflationary economy. Turkey’s millionaires appear to be fleeing both deteriorating financial conditions marked by very high inflation, and President Recep Tayyip Erdogan’s crackdown on his critics, including those in business.

Millionaire migrations can be a positive sign for a nation’s economy. The losses for India, Russia and Turkey were gains for havens like Canada and Australia, joined lately by the United Arab Emirates. Owing largely to the stability and glitter of the most famous emirate, Dubai, the United Arab Emirates in 2017 had a net inflow of 5,000 millionaires, increasing the size of its affluent population by 6 percent, the largest gain in the world. Britain was among the millionaire havens until 2016, but may continue losing ground until it can resolve the uncertainties raised by Brexit.

Savvy locals are also the first to return when a country’s fortunes begin to turn for the better. In seven of the last 12 major currency crises, residents started bringing money back earlier than foreigners.

More broadly, economists and politicians might rethink the blame they heap on “immoral” foreigners in periods of capital flight. They assume global money managers are more sophisticated than provincial locals — but those longtime residents are in fact quicker to spot and respond to trouble in their own backyards. They might also assume that residents are more loyal than foreigners. But the drive to protect one’s assets often trumps patriotism.

Millionaires move money mainly out of self-interest, to find more rewarding or safer havens. There aren’t a lot of them, but they can tell us a great deal about what is going wrong — and right — in a country’s economic and political ecosystems. Leaders who create the right conditions to keep millionaires home will find that all of their residents — not just the wealthy ones — are richer for it.