Sunday, December 6, 2009

How dare rich Vietnamese drive Maseratis or Rolls-Royces. Let them ride bicycles

When I returned to Hanoi for the first time in six years back in March, I was extremely surprised to see a red Ferrari cruising around Hoan Kiem lake, the evocative pool of water at the heart of the Vietnamese capital.

But, after overcoming my initial shock, I came to the opinion that such conspicuous consumption was a sign of just how rapidly (if unevenly) Vietnam's economy had been developing.

Matt Steinglass, Hanoi correspondent for German press agency DPA, appears to have taken a rather more sneery view of the growing numbers of wealthy Vietnamese who are opting to purchase a Rolls-Royce or Maserati. He wrote on his blog:

Vietnam is entering that period of its economic development, passed through by most countries on their way to industrialized wealth, in which it destroys everything that used to be valuable about its built environment, makes every possible stupid mistake in failing to adapt its landscape to the coming threat of wealth and modernity despite abundant warning from neighboring countries that have gotten there first, and generally attempts to make itself look like a fat, ignorant, corrupt executive’s conception of Orange County, CA.

In underdeveloped countries, especially a Communist one like Vietnam, the distastefulness of this phenomenon is exacerbated because, lacking any longstanding indigenous wealthy class, the newly fantastically rich take to the phenomenon of wealth as if they had just invented it.

The idea that there might be anything crass or displeasing about gross displays of conspicuous luxury in a country where per capita GDP remains just over $1000 does not seem to enter people’s heads.

Such "gross displays of conspicuous luxury" may offend Steinglass' expat sensibilities but none of the Vietnamese friends I spoke to, most of whom can barely afford a motorbike, were particularly disturbed.

Some joked about how the Communist party probably picked up the tab for the cars in one way or another, while most agreed that such public displays of extreme wealth would drive people to work harder, earn more money and achieve more in life.

Do the people in the photo accompanying this story, courtesy of Flickr user fletchy182, look put out by the sight of a Ferrari in Hanoi or just intrigued?  

While I agree that many top-end cars look utterly ridiculous, that's just as true whether they're being driven around Mayfair by a Russian oligarch or through Hanoi's Old Quarter by a Vietnamese entrepreneur.

Steinglass is right to raise concerns about traffic management in Hanoi - with car ownership growing rapidly, there is a real risk that one of Asia's most pleasant cities will end up as just another jam-ridden, pollution choked-den of iniquity a la Jakarta or Manila.

But that, surely, is an issue for the local government, not for those individuals wealthy enough to buy cars.

There are, quite possibly, questions to ask about how the super-rich in Vietnam have generated their wealth. For most, there is a high probability that their ascent up the greasy pole was boosted by some form of cronyism or corruption.

But, the provenance of their wealth notwithstanding, why shouldn't rich Vietnamese buy fancy cars?

Would Steinglass prefer it if they traveled around on bicycles or cyclos instead of Ferraris so that the traditional, colonial charms of Hanoi could be preserved for the enjoyment of well-off Westerners?


  1. Steinglass would prefer it if Hanoi would build a subway or light rail system and ban gas-powered motorbikes in favor of electric ones (like Beijing), and limit access to the central city by charging congestion charges and parking fees (like Amsterdam and London).

    Sociologically, Steinglass thinks that public choices about transit are made in accordance with cultural values and not strictly in accordance with economic incentives. A bit of reflection on the very different transit solutions embraced by different cities (Los Angeles, New York, Amsterdam, Paris, Jakarta and Shanghai, for instance) should demonstrate this. What's happening in Vietnam is that there is almost no constituency for genuine public collective action, and no natural appreciation of the value of public goods. Public goods, including streets, parks, universities, bond issues and SOEs, are conceived of as no-responsibility spaces where the only sensible thing to do is to carve off as much territory or revenue as possible for one's private (family) interests. This tendency is a rational reaction to the way public institutions are in fact working in Vietnam, and much of it is probably a legacy of the way people had to behave in the old "subsidised economy" (ie Soviet-style pure socialism).

    The difference is that in Eastern European states, socialist economies were prosperous enough to build an urban infrastructure that was inherited by succeeding free-market states and has helped structure their urban planning choices. Prague, Kiev, Moscow and St. Petersburg have metros, trams, parks, and some very competitive universities with real research programs and revenues. Vietnam was a desperately poor socialist state; it built a decent primary education and health system but almost no urban infrastructure. So it's entering its period of prosperity with a newfangled laissez-faire ideology and culture of extreme public underinvestment. And that's why its national highway is still 2-lane for much of its length, the rail system (passenger and freight) barely functions, 20-story skyscrapers are going up in an Old City of medieval alleyways with no plausible plan as to how workers will get to and from work, etc.

    Extremely expensive automobiles are signals of a society that is investing its export-earned dollars in the wrong things. Hanoi needs parks and soccer fields; MOH studies show Vietnamese kids are stunted and physically uncoordinated relative to Thais and other neighbors. Instead Vietnamese are buying Bentleys. Because of the tight linkages of the state-owned and private economy in Vietnam, the idea that a Bentley does not represent a drain from public funds is naive.

  2. Thanks for your comments Matt. I agree that Hanoi needs some proper public transport before it's too late and share your pessimism about the likelihood of that happening.

    But I don't think the lack of public transport and the ever-greater volume of traffic clogging the streets is as much a cultural as it is an economic issue.

    People with little are generally much more focused on improving their own lot in life rather than investing in wider "public goods".

    As you seem to accept, the fact that East European states have decent public transport and public spaces is because their formerly communist governments had enough cash to build and sustain them.

  3. "For most, there is a high probability that their ascent up the greasy pole was boosted by some form of cronyism or corruption." Totally true! Very sharp thinking!

    Those that possess luxury cars and others big items, are not ordinary Vietnamese hard working people1

    They represent what the Communist party claimed during the Vietnam war that "those materialism people must be kicked their ass off Vietnam because of bad influence by American!".
    Unfortunately, after the Vietnam war, those Communist regime, Communist party and their own young generation, and their own community, have shown exact the same image.

    Now, materialism people with the Communist root only being accepted in Vietnam.