Why Eduardo Saverin Has Company in Singapore

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Bloomberg Businessweek | May 24, 2012

By Ayesha and Parag Khanna

It’s a cliché that the Pacific Ocean is displacing the Atlantic, that China will replace America at the top of the world’s hierarchy of power, and the East will surpass the West. The cliché is also wrong. The multipolar world we are entering will have no single winner, and the three-pillared West of the European Union, North America and Latin America remains a triangular zone of peace and foundation of global stability.

But a world of continued Western power is not a world of Western dominance. Areas once considered the West’s eminent domain such as the Middle East and Africa are now looking East for investment and exports, and new models of growth, development and governance. It would not hurt for the West to do the same.

It can start by looking at Singapore, to which the two of us are relocating shortly.

Few Americans even knew that Facebook co-founder Eduardo Saverin lived in Singapore until it was revealed this month that he had given up his U.S. passport and become a citizen of the Asian city-state. Saverin has been pilloried by critics who accuse him of dropping American citizenship in order to avoid paying tens of millions in U.S. taxes after Facebook’s IPO. New York Senator Charles E. Schumer has proposed legislation that would bar former citizens like Saverin from re-entering the United States if they are deemed to have renounced citizenship in order to avoid taxes. “This is a great American success story,” Schumer said, “gone horribly wrong.”

Nothing could be further from the truth. Saverin and expatriates like him are practicing a perfectly rational arbitrage in a world of diverse systems and growing opportunity. Rather than question the loyalty of such global citizens, Congress should examine what their choices tell us about how Americans can succeed in the knowledge economy of the future.

Migration is about opportunity, not loyalty. For the past generation, Eastern talent has been educated in the West and stayed, rising to the top of professions from medicine to academia, and founding over 40 percent of Silicon Valley start-ups. But now many of those immigrants are going home, lured by Asia’s economic growth, infrastructure spending, and improved governance. A report released Tuesday by The Partnership for a New Economy cites the grave challenge to the U.S. economy from Asian nations’ – particularly Chinese – aggressive efforts to lure back their expatriate students and graduates in the U.S. You don’t even have to be Asian to find work in Asia’s shiny new corporate parks and research labs. China is launching a new scheme to recruit the best and brightest talent from all races and nations on permanent visas: call it a “red card.”

American expatriates represent only 1 percent of its population, far less than other developed societies. Geography is one significant reason. Americans have gotten used to believing they sit in the center of the world, but in fact the U.S. is the last major nation to complete the day (Brazil’s east coast is an hour ahead of New York). It is parochial, not to mention impractical, to believe that the rest of the world will wait for American instructions as it goes about its day. Instead, more and more traders and investors are moving to California so they can speak to Asian clients and partners at more reasonable hours.

To live in the future, you have to move to it. Singapore is not just a city-state; it is perhaps the world’s leading “info-state.” In the 20th century we spoke of garrison states and even market-states, but in this age wheregeo-technology is the key driver of geo-economics and geopolitics, it is the info-state that will have the upper hand. Info-states harness in knowledge and technology what they lack in size or military muscle. Info-states thrive by providing not just security, but alsoconnectedness to rapidly advancing markets and technologies.

This is why leading corporations have also been relocating to Singapore, including most recently the commodities trading giant Trafigura, which decided to relocate its main trading center from Switzerland.

Like Switzerland in the heart of Europe, Singapore is geopolitically nimble and diplomatically neutral. It thrives as Asia prospers, and even benefits from turbulence as investors and talent seek a safe haven. As it nears the 50th anniversary of its founding, Singapore has become the unofficial capital of Asia.

There are important things the West can learn from Asia. Leading Western companies like GE, IBM, Cisco and others have been heavily involved in constructing Asia’s “smart” cities. Lower-cost private universities are flourishing across Asia while American drop-out rates are soaring. Enrollment in private Chinese universities has grown 25 percent since 2001, and over one percent of Malaysia’s GDP now comes from higher education. Education, social stability, and sustainable consumption: these are values now as universally important as democracy.

Singapore and other Asian finance and tech centers pay deep homage to Silicon Valley and work hard to emulate it. We would be wise to do the same. Singapore’s outgoing ambassador in Washington, Heng Chee Chan, is a political scientist who has traveled across America relentlessly in recent years pointing out all the ways Singapore not only practices democratic elections (the ruling People’s Action Party of Lee Kuan Yew suffered sharp set-backs a year ago), but constantly consults citizens through district level outreach and technology to calibrate its policies. America could use a lot more such real-time governance. Technology allows it and citizens should demand it.

Singapore is entering its next 50 years as one of the few unmitigated success stories of the post-colonial world. It sits at the heart of the Indo-Japanese-Australian triangle, a strategic zone that is a world unto itself, the most populous and diverse region in the world. We are rapidly moving into a future where West needs East as much as the reverse.

Ayesha and Parag Khanna are Directors of the Hybrid Reality Institute and authors of the forthcoming book Hybrid Reality: Thriving in the Emerging Human-Technology Civilization (TED Books, 2012).

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