In case you missed it yesterday: South China Morning Post business columnist George ‘Mr Shangkong’ Chen has found the solution to Hong Kong’s housing woes. The problem, he says, is not that homes here are too expensive; it’s that people’s incomes are too low. “The Hong Kong government should focus on how to make Hongkongers rich,” he says.
To illustrate his point, he recalls how rising incomes have made luxuries into everyday commodities since he was a youth in Shanghai a decade or so back…
A cup of Starbucks latte cost something like 10 yuan, a luxury for students at that time. Many young Shanghainese would take their boyfriends and girlfriends on dates to Pizza Hut, which was considered a decent restaurant about 10 years ago rather than just another fast-food place.
Today, the same cup of Starbucks latte costs about 30 yuan (HK$37.30) and it is no longer a luxury but a daily necessity for some students.
How much has Starbucks raised the price of its coffee over the past decade? About threefold.
The author sort-of concedes that a cheap, fungible, internationally traded consumer discretionary that grows on trees and residential real estate are ‘two very different things’. But then he returns to the comparison by saying how wrong it would be to blame rising coffee prices in Hong Kong on Mainlanders.
The problems of Hongkongers (and Shanghainese, for that matter) who can’t afford a home, the problems of American families who have to declare bankruptcy to pay chemotherapy bills, the problems of Northeast African farmers dying because of famine – all solved: your incomes are too low. It’s not that the economics is inside-out so much as the fundamental logic. If it’s satire, it’s really bad. If it’s not satire, what on earth is going on?
As luck would have it, columnist Craig Stephens of MarketWatch also takes a look at Starbucks and housing. Like many, he is inspired by Financial Secretary John Tsang’s post-budget claim to be just like all the rest of us coffee-drinking, middle-class French-movie fans. The thesis is essentially that people are treating themselves to little luxuries like almond-and-cream cappuccinos because the traditional aspirations – such as an apartment – are now out of reach. Stephens’ solution is to scrap Hong Kong’s currency peg. Others would say scrap the high land-price policy. Some might say scrap both, if the distortions they produce are creating a largely downwardly mobile society. And scrap the ‘individual visit’ Mainland tourist scheme, while you’re at it. Perhaps this would count as ‘making Hongkongers rich’ as George Chen would put it.
The last thing we really need at this point is for rabidly pro-Beijing commentator Lau Nai-keung to join the debate, but here he comes. After a rather fruitless discussion about whether John Tsang is middle class in either modern academic or Marxist senses, he more or less straddles the George Chen and Craig Stephens approaches. On one hand, the Hong Kong middle class are in fact poor and need subsidies from the government. On the other, the reason for this is the failure of the ‘financial services and real [estate] industries’ to distribute wealth equitably. Delete that phrase in quotes and insert ‘dollar peg’, ‘land policy’ and/or ‘tourist influx’ according to taste.
Lau doesn’t mention coffee once; whatever its social status, the stuff is distinctly unpatriotic.
What everyone is talking about here is the widening economic gap between a small group at the top and most of the rest, with the middle class in the Lester Thurow sense shrinking in size. Not just a Hong Kong phenomenon, though of course we have to have a high-density version of it in the Big Lychee. As for a definition of middle class, for what it’s worth: ‘that part of the population who are either whining now about unaffordable housing, or will be whining later on after the bubble bursts about negative equity’.
On a brighter note: I’ve just spoken to someone in Beijing and asked if they can get Rita Fan out of everyone’s cameras and microphones – give us all a rest down here. They’ll see what they can do. My good deed for the day.
Daily Telegraph correspondent Malcom Moore’s tweets from yesterday’s opening of the NPC…
When I was the news editor of a university newspaper we invented Worthington’s Law (named after a pronouncement of the Editor who went on to run British rail Eurofreight) at about 4 am one night. We wrote it on the wall and I think it may still be there:
“The longer an article is, the longer it takes to read.”
Perhaps we can inaugurate some George Chen Laws such as:
” The less money people have, the less they can buy.”
As ever though, economics only gets you so far. On a diet of awful radio and TV, watery coffee, MP3 music, pap Hollywood films and Cantopop, no exercise or fresh air, appalling architecture, cheap McDonalds and tapping iPhones at every turn, the minds of Hong Kong people have atrophied to the point that they equate money with happiness. That’s the real problem.
As we have to repeat to Chen, Lau and just about everyone else: “It’s all about psychology, stupid.” Blessed are the poor in spirit for they will live in Mid-Levels.
As the Daily Telegraph features today, everyone might be interested in the Telegraphs slideshow of the worlds top10 richest people, featuring our very own Li Ka-shing at number 8 (4th photo in the slides). Seems his fabulous wealth allows him to fund a complete makeover, making him look like a Jackie Chan impersonator…..
http://www.telegraph.co.uk/finance/businessclub/9907703/The-worlds-ten-richest-people-in-pictures.html?frame=2499416
or is this just another example of a westerner thinking all Chinese look the same.
So it’s not just the in your face patriotism as a reason not to read the PCMP they now employ halfwits like Mr. Georgie ‘Shangkong’ Chen. Georgie, in the unlikely event you read this blog and the comments, here’s a quick overview of why HK has the world’s highest property prices (and by god we’re proud of it).
First it’s de-facto Government policy and has been for generations. You sell a few large plots only if your very high reserve price is reached. Next you allow your cohorts (Developers) to get away, nah reward them, with some breath taking shenanigans. Add to the mix some imported low interest rates and lots of hot and cold QE 1, 2 & 3 lolly. Finally it helps to have thousands of patriotic mainlanders, with so little faith in the middle kingdom, that they will pay anything to get their legal or illegal stash the other side of the border / boundary and into bricks and Cheung Kong. The result is you too can buy a 680 sq.ft unit in “the Wings” in Tseung Kwan O for a million U.S.
Have I missed anything, apart from a second cup of java?
Now its a bad case of asking people to eat cakes. Either Georgie should be tackling Jack Kamp’s column or assist Susan Jung’s receipes. Liquidity isn’t just the problem. Specifically, HK’s problem is that we have been keeping cats (mind you, fat ones too!) but there are no mice to catch. The last administration (especially Ducky’s) made sure that HK did not have their fair ration of mice compared to our northern cousins.
This is what is so wrong with HK today – misplaced values, stupid leaders (seen when they open their mouths – eg. Rita Queen Bee Fan), lack of sharp thinkers (everyone criticises the budget but no one dares to give an “alternative” budget to help fix HK and how to use the reserves. Fear of pinning things down).
But worst off, main media is a reflection of why The Big Lychee is starting to rot. Except for the saving grace of the financial section columnist, a few political reviews, one wonders whether SCMP’s hike in price is justifiable. We want a refund.
That’s Justin Chiu, top flunky at CK.
Does look a lot like Jackie Chan though, doesn’t he…..
Oh dear..it’s the Hong Kong exploding air conditioner season already!
Truck on fire after air conditioner explodes
(03-04 14:07)
A lorry in Tai Wai was on fire after the air conditioning system exploded at around noon time. Two pedestrians, aged 53 and 58 respectively, were hurt by broken pieces. They were taken to Prince of Wales Hospital for treatment.
Firefighters quickly put out the fire on the lorry parked at 37 Tai Wai Road. (HK Substandard)
Alchemist..you’re on the right lines…to be more precise…
” If you believe that only the richest people are genuinely happy all the time, then middle class people must be either:
1. Depressed half the time;
2. Indifferent most of the time or
3. Happy only half the time.
The likelihood is that they are indifferent or depressed most of the time. Anecdotal evidence in Hong Kong overwhelmingly supports this conclusion.”
There we are. No slide rule needed. Done.
(Bela’s Law No 1)
A fine photo of Rita: she’s so butch as to have both Maria and Once-Pretty Housewife wetting themselves.
A little learning is a dangerous thing. When you’re trying to define slippery concepts, it helps to think about what they are not. Why “middle” class? But then Lau Nai-keung would have to talk about grass roots, and that might upset people.
His ghost-writer (the word is for once apposite) must be on holiday. Funny thing, RTP is also very quiet.
I couldn’t believe how bad George Chen was — until Hemlock’s exposé revealed the awful truth: he’s so bad he’s wonderful.
What good is a billion if you have to piss, but you can’t ?
Talking about in-your-face patriotism, I stumbled across Ann Marie Sim and Tony Sabine on ATV last night doing a 30-minute puff-piece promoting China’s ownership of Tibet in a thinly-veiled “documentary” that seemed to be a translation of a Mainland script. I suppose one must dance to even the worst of tunes when, in professional terms, the only way to go is down.
“Stephens’ solution is to scrap Hong Kong’s currency peg. Others would say scrap the high land-price policy. Some might say scrap both, if the distortions they produce are creating a largely downwardly mobile society. And scrap the ‘individual visit’ Mainland tourist scheme, while you’re at it.”
I could live off those scraps.
Bela Mela. Switch on the TV and you see talking heads everyday. Now they want us to watch them on another 3 more stations! Hong Kong’s leaders, politicians and community leaders in most recent times likes to drive by looking at the rear view mirror.
Rights of abode: Ducky refused to challenge the court ruling thus kicking the can down the road.
Mainland mothers: Today, we say we will destroy the medical sector. Free enterprise means private hospitals are allowed to admit anyone that can pay. But once you cut off the right of abode issue, how many will come? Therefore, private hospitals should sleep in the bed they make. Government hospitals are reserved solely for HKer’s. Now we are making immigration staff do donkey stuff.
Parallel traders aka tourist: Either everyone gets a one-way permit or once a day instead of multiple. James Tien can’t have the cake and eat it. We have reached our 50 mil, now he wants the other 50 mil without the “disgusting” traders. Now besides the immigration, we are making the police, customs, reporters, vigilantes & MTR staff do more donkey stuff.
Milk powder: Albert “shit stirrer in the teacup” Cheng propose we give free milk for three years to HK mothers. Welfarist state and/or another SCMP shitty weekly garbage? We are a laughing stock when globally we are known as the 2 tin city. See today’s news on the first prosecutions – we feel ridiculous. HKer’s petitioning Obama is even more ridiculous. Where have the good minds gone?
Tons of money flowing in: Chiyu Bank doesn’t know why it keeps flowing. We no longer talk about millions (“mieu” in Cantonese) but 100 millions (“Yik” in Cantonese).
Population projections: Anyone game to venture an answer? Impact on pillar industries, housing, medical and education?
And Georgie boy ask us to eat cakes!
Your photo of Rita Fan, Maria Tam and company, now up in Beijing as Hong Kong deputies to the NPC , seems to prove that female deputies are not allowed to sport even one grey hair ( unless an ex-Secretary for Justice).
Surely a new punitive law ($500,000 fine and 2 years imprisonment) should be introduced banning H.K. visitors to the Mainland from carrying more than two packets of black hair dye either on a trolley or concealed on their person. If this anti-social behaviour is not contained it could cause the price of hair-dye to increase beyond the affordability of people living on the Peak.
Sorry folks… I’m not trying to generalize & oversimplify things but its apparent, the cup overfloweth…
Alchemist
Seriously. You must stop watching local TV and reading the SCMP.
It’s just self-harm.