The Wall Street Journal reports on causes of increasing wealth in Singapore:

http://online.wsj.com/article/SB10001424127887324662404578334330162556670.html?mod=e2tw

“Singapore has long been a magnet for rich expatriates and multinational corporate executives. They are attracted to the city-state’s low taxes, virtually crime-free streets, pro-business policies and predictable government”

Note that every one of those policies are facets of property rights. Well, assuming “pro-business policies” means that their property is protected and not that the government uses its coercive power to aid them.

“Unlike the West or even places like the Middle East, though, much of the new wealth being created in Asia is emerging in countries where rich people see their assets at risk, either because of unreliable governments or unloved ones. The Chinese alone are reportedly exporting billions of dollars, saying they no longer trust their government and want to put their money elsewhere. Indians and Indonesians have likewise been looking for a place where they can stash cash to avoid high taxes or work with international-class wealth managers, while steering clear of the unpredictable policy shifts in their rambunctious—and some say, corrupt—democracies.”

Again – property rights are the number one consideration. If you can develop a society that protects them strongly, you have a gold mine. We’ve watched that for the last two hundred years in America and we see it now in Singapore. It’s hard to overestimate how much value you possess when you have a super strong right to that value.

“But what really checks all the right boxes for many of the world’s ultra-rich is Singapore’s obsession with order, predictability and control, all of which give comfort to individuals whose fortunes have recently gone down the drain in many parts of the world.”

That is what seems to be lost on the whole Cypress/EU ordeal. The short-run win is stability. But, long-term, all that matters is how secure your property is. Capital is super liquid and slippery. You steal it and it can run away in a hurry. If government makes decisions based on a 20-year horizon, these things are a no-brainer. Eventually, even if it takes a decade (but almost always shorter), financial stability will return. Those with a rock solid right to their property will go to work growing and exchanging that value, but those that don’t have a strong right will continually scramble to protect it from theft. You tell me which society will be more successful a decade hence.