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More reviews by John D. Van Fleet
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Asian Godfathers: Money and Power in Hong Kong and Southeast Asia by Joe Studwell
This is a sad story. A story of abundant wealth diverted, of development opportunities deferred, of poverty unrelieved. JOE STUDWELL's ASIAN GODFATHERS: MONEY AND POWER IN HONG KONG AND SOUTHEAST ASIA challenges the mythos surrounding Li Ka Shing, Robert Kuok and a group of about 50 others, the economic kings of Southeast Asia he calls godfathers. Studwell is creating a pattern -- his 2000 work, The China Dream, challenged the China hoopla of the late 90s.
In his introduction, Studwell asks why Southeast Asia, a region of almost 500 million people, has a Latin America-style wealth distribution, with the masses in poverty and a relative few with phenomenal wealth. Why a region with no non-state company in the global top 500 can also have thirteen individuals among the top 50 wealthiest in the world. Asian Godfathers aims to answer the question. (Early on, Studwell refreshingly dismisses the common assertion that being Chinese confers an unusually high potential for economic success, showing that the predominance of ethnic Chinese among the godfathers devolves from the colonial era and emigration patterns rather than genetics.)
Mario Puzo created myth-encrusted characters in 1972s bestseller The Godfather; Studwell borrows the term with the goal of acknowledging, then bursting, the mythos surrounding these men (they are male save one or two). Media consumers have been force-fed repeated helpings of stories about the godfathers as economic clairvoyants, captains of wealth creation, etc. Studwell asserts that the godfathers are creating little if any wealth in their areas of operation (Hong Kong, Indonesia, Malaysia, Philippines, Singapore and Thailand) -- that they are rather parasites, or "asset farmers" as he calls them, having gained monopoly access to limited resources (raw materials, port facilities, banking licenses) through guanxi with political cronies, maintaining it through bribery in various forms, and pocketing use fees.
Studwell posits that:
* Real wealth creation should boost GDP;
* GDP in Southeast Asia is intimately linked to year-on-year export value (he implores readers to memorize a graph in the appendix that proves the case);
* The godfathers don't play in the export business sector because it, unlike the monopolistic sectors they prefer, is truly competitive, and;
* They therefore have not contributed to economic development in the region;
* Weak governance (corporate and political) allows them to maintain their monopoly holds on the assets they farm.
Readers may wonder along the way why Studwell doesn't track market capitalization or other publicly available performance data, common indices of wealth creation, of the listed vehicles controlled by godfather conglomerates; he illustrates throughout the relatively short text (200 pages -- notes, appendices, a "cast of characters" and an index account for another 125) that the listed vehicles of these conglomerates are in no way indicators of conglomerate performance overall -- that they are often bled by the godfathers for cash, or used as septic tanks for bad assets, in transactions that would be actionable in well-regulated securities markets. No one expects transparency or good CG in places like Malaysia, Thailand and the Philippines, but the Hong Kong that Studwell describes mocks its image as a transparent market where shareholder rights are respected.
In earlier drafts of his work, Studwell apparently attempted a by-country or by-godfather organizational structure. He settled on organizing by themes -- Part II, titled "How to Be a Post-War Godfather", describes how godfathers develop core cash flow, build appropriate organization and develop banking capabilities, with examples cited to establish each assertion. But this structure lends to the only major flaw in Asian Godfathers: in his zeal to present a coherent case and fit four dozen individuals into the thematic descriptions, Studwell's reach sometimes exceeds his demonstrable grasp. In the now-vintage film version of All the President's Men, the Deep Throat character complains to the Bob Woodward character that, in attacking a conspiracy, "you build from the outer edges and go step by step. If you shoot too high and miss, everybody feels more secure." By sometimes making unsupported generalizations, such as his assertion that the godfathers are disproportionately evangelical/spiritual, Studwell unfortunately gives ammunition to those who wish to dismiss his much-needed indictment of the kleptocracy class.
And the publisher should be spanked. Studwell spent years creating an important book that deserves to be taken seriously, but it sports a silly cover -- two tarted-up Asian anime gals looking like cheerleaders, holding a rah-rah banner over the godfathers, drawn to look as if they're at a college graduation ceremony. Suitable for manga compilations, not this valuable work.
Neither of these objections should deter readers -- 10% of the world's population lives in Southeast Asia, the elites in control are abusing that population, and Studwell does solid spadework in showing us how. He hopes that his work will gain sufficient influence to rival that of Lytton Strachey's Eminent Victorians of a century ago, which used a select cast of characters to lampoon broad swathes of Victorian England. For the sake of the people of Southeast Asia, Studwell deserves to achieve his literary dream.
John D. Van Fleet
01/10/2007
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John D. Van Fleet, adjunct faculty and advisor to the Antai College of Economics and Management, Shanghai JiaoTong University, is director and editor of 'The NNA China Report'.
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