Tackling poverty, Hong Kong-style

Recently seen in a corner of the meat section at a wet market in one of Kwun Tong’s less prosperous neighbourhoods: a pair of folding tables piled with gleaming, cheap bits of pig. This is where you come if you really find it hard to get by. The items on offer, I am reasonably sure, are (L-R, top to bottom): snouts, ears, hearts, lungs, upper and lower intestines, liver, tongue, trotters, kidney and tripe. For contrast, we go to Oliver’s deli in Central, where we find caviar available at around 1,000 times the price by weight (roughly – assuming the pig parts are priced per catty and the caviar can is 100 grams).

One-time government advisor Leo Goodstadt recently said of Hong Kong’s former Chief Executive: “Donald Tsang hates poor people.” Perhaps “…worships property tycoons,” would have been a less inflammatory way of saying it. Most observers agree that land, other economic and immigration policies, plus global trends, have combined over the last 15 years or so to give Hong Kong a yawning wealth gap. The CY Leung administration at least shows a willingness to recognize the problem. After months of discussion, a commission decided to draw a poverty line at 50% of median income, which is how they do it in most places. This leaves a fifth of the population officially poor, and the other four-fifths of us tut-tutting about how bad it is. Except the New People’s Party lawmaker Michael Tien, who points out that a lot of these people get public housing at a tiny fraction of market rent, which frees up a big chunk of their income. By his calculation, this reduces the truly poor from 1.3mn to more like 400,000.

He accuses the government of political correctness – including the quasi/semi-poor among the ranks of the dirt poor in order to avoid being accused of heartlessness. He may be right. But there’s another possible explanation. Chief Secretary Carrie Lam says handouts are not the answer because they are unsustainable from a fiscal point of view. But what if you aim cash assistance only at Michael Tien’s really poor 400,000? Recurrent government expenditure for 2013-14 is HK$300 billion, of which let’s say half/quarter must be civil servants’ salaries, which are seriously out of balance with the private sector. Trim their pay bill by 10%/20%, and you get enough, by my rough calculations, to put each of the 400,000 dirt poor on at least a HK$3,000-a-month income supplement. I’m not saying that would be good policy – just feasible at no extra cost to the taxpayer.

It would surely help to know why this poverty exists in the first place. Some must be due to the globalization/hollowing-out phenomenon that has suppressed middle-class incomes in the developed world for several decades. Some must be the impact of excruciating rents on poor non-property owners, as exemplified in per-foot rental costs in tiny subdivided apartments. This is largely due to government policy, notably Donald Tsang’s perverse decisions in 2005-2010 to – in effect – push housing prices up as much as possible.

It is politically incorrect and not necessarily good taste to mention the Mainland impact in all this. The influx of Mainland shoppers has pushed rental costs up, reducing opportunities for local entrepreneurs. The arrival of Mainland property buyers has pushed home prices up, ultimately reducing disposable income for locals who must pay more for housing. As median incomes show, retailers’ revenue from Mainland shoppers goes straight out of the economy without trickling down much, so this all adds up to less wealth for Hongkongers, all else being equal.

Treading on ever-more sensitive ground, there’s the arrival of 55,000 new residents a year from the Mainland, inevitably adding to the demand for living space, and adding either to the rise in rents, or directly to the actual number of people in poverty. As the responses to Green Sense’s recent protest show, bureaucrats cannot countenance a clampdown because the politics are nightmarish, while economists in ivory towers see disadvantages. At the same time, local mothers are up arms again: “I had to compete with Mainlanders for a hospital bed. Then it was milk powder. Now its [kindergarten] places.”

Should we treat Mainlanders (as visitors or migrants) equally to other nationalities on principled grounds of basic fairness and decency, or should we be allowed to implement temporary discriminatory quotas and moratoria against them out of pragmatism? This goes beyond just the poverty issue, but it’s a major part of it. Most of the rest of the poor are a cohort of uneducated elderly, who will exit our demographics in due course; the Mainlanders account for much of the ongoing and future changes in our population profile – so whether they increase or reduce overall poverty in the long run is important.

But no-one’s going to talk about that. No-one even knows what’s actually causing the poverty. They can’t even decide whether it’s 1.3 million or 400,000. This suggests those pig guts will probably be on sale for some time to come.

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20 Responses to Tackling poverty, Hong Kong-style

  1. Karen Eliot says:

    “Tackling poverty, Hong Kong-style”. Karen Eliot approves this message.

  2. Real Tax Payer says:

    Deep stuff today Hemmers.
    Many thanks for asking the questions few dare to pose

  3. Joe Blow says:

    Off topic, but I would like to inform some of the elderly regulars here (RTP, Adams) that the Happy End Sauna on Lockhart is offering a senior citizen discount on Mondays (2-4-1). Thought you would like to know.

  4. Grog says:

    Speaking of trimming civil service pay is the sort of uncharitable comment that hurts civil service morale. Please make it stop.

  5. Failed Alchemist says:

    1.3 million in poverty – almost 18% of HK’s population. Another 1.3 million are property agents. Maybe 1-2 million millionaires (according to Citibank). A few thousand tycoons and another few hundred thousand civil servants with ostentatious salaries (or ex-civil servants being sued by banks). HK is pretty well categorized and its easy to fill the 7 million slots.

    Now here’s the trick, how to get the civil servants, tycoons, property agents and millionaires to get the poor to sip coffee and watch French movies.

  6. maugrim says:

    There are people in HK who are poor by any stretch of the imagination. However, there are Mercedes and other quality marques littering the parking areas of popular estates such as Wah Fu. A number of non-Chinese are also on the lam, dad works in a job that pays a low-average wage, mum doesnt work. Combine that with a few kids you get subsidised housing and any other benefits going, including CSSA. I think MT is onto something. Perhaps cash where its needed most isnt a bad idea.

  7. Jeff says:

    Bang on about Tsang. Idiotic beyond belief to allow housing prices to rise as they did those 5 years.

    He has created, or at least allowed the creation of, a sharply divided city, a city of those with property, and those without, each group with interests directly opposed to the other. Nice one. Not the best route to ‘stablilty’ and ‘harmony’, Don.

    Further, he has helped to create the current massively unrealistic expectations of property owners, expectations that their investment will gain minimum 10% per year forever and ever. Anyone who bought in the last two years might be in for a rude surprise.

    You have to keep the conditions constant, not fuck about cancelling HOS, etc. Keep public supply consistent, and the market will adjust to it. Elementary policy, but not for our idiot friends like Donald, clearly.

    A healthy property market should get you a point or two above inflation, maybe a bit more sometimes, sometimes a bit less. Any more than that, and your have a grasping rentier class that strangles the rest of the economy. In other words, you have Hong Kong.

    Finally, someone tax the fuck out of unoccupied flats please. Never comes up. Amazing.

  8. PropertyDeveloper says:

    Property is at the heart of the problem of poverty. If the price level in 2003 was about right, in terms of historical prices and the obvious perspective of an increasingly unpleasant Hong Kong, since then it has more than tripled, an amazing figure.

    Hemlock has been saying for decades that an appropriate level to property prices is a taboo subject in government circles, but he’s been preaching in the desert.

    It may all be a plot to destroy the country parks, a foreign concept implemented by foreigners. It’s no coincidence that the next Chinese five-year plan wants to harmonise and rectify them (the parks I mean).

  9. Stephen says:

    I found myself watching (I promise myself not to watch because I know it will get me all worked up) Chugani getting chewed up and spat out by Carrie last night on this issue. Carrie wants HK$14B to fix the problem.

    Can someone remind me how much does the following cost in total?

    • The stupid bridge to nowhere – cars to Macao and Zhuhai?
    • The fast train to a suburb 40 minutes outside Guangdong?
    • The utterly unnecessary third runway (third and fourth runway already built in Macau and Zhuhai respectively) ?

    When will this Government with reserves equal to two years total Government expenditure stop agreeing to everything the Property / Construction cartel demands and start fixing this ever widening poverty gap?

  10. Pornstar Wong says:

    With regard to the 150 a day that migrate to HK. Many of these family reunions are false marriages arranged via brokers. The going rate a while back was HKD40,000 – which is a lot to an old unmarried HK security guard or construction worker. After arriving in HK, many of these women divorce and get low-paid or dodgy work – ranging from dim sum waitress at HKD 20 per hour to the sex industry. They have limited opportunities as they cannot use traditional Chinese characters and they don’t have HK qualifications. Some stay with their husbands – occasionally in an open marriage – often giving birth to a child. If they move out, they go into subdivided housing. They sometimes get support by moving to areas in HK which have connections with their home province . My daughter says you can get discount in the wet market in North Point if you are from Fujian.

  11. C Law says:

    Please note that the piggy items you list are widely regarded as good food items, not just food for the poor. At dinner with three middle class ladies yesterday we consumed a plate, bought fresh from the market where they were being snapped up by people who were definitely not poverty stricken.

    At the same dinner the view was expressed that a lot of the people in poverty result from poor HK men going to the Mainland to marry unsophisticated (as in not being aware that the grand-sounding $5000 pm was a pittance in HK) country girls and subsequently bringing them back to HK, where they cannot afford to keep them and their children. There was a distinct lack of sympathy for these “losers”, who should never have married when they obviously couldn’t afford to raise a family. My comments that this was hardly the fault of the wives and children were sniffily dismissed as liberal welfarism. This is another aspect of the adverse effects of closer contact with the Mainland, though one which has become much less of a problem recently as even rural Southern Mainland people have caught up on the income scales.

  12. Gin Soaked Boy says:

    @JB. I’m not sure the bachelors of Rome would approve of you spreading messages that encourage the waste of precious seed. Don’t forget “Every sperm is sacred …”

  13. Real Scot Player says:

    None of this uber-poverty was in the media before 1997. Not to say it wasn’t there, I suppose. But I think we can safely say the roots of this problem post 97 are up north.

  14. gweiloeye says:

    I wonder if the moustched Tsang will consider himself on the poverty line when his french wine costs a whole lot more after the US defaults and the exchange rate, due to his beloved peg, makes the HKD worthless against the EUR? He might have to downgrade to Californian wine…

  15. Gumshoe says:

    The best solution I have heard for the housing problem from several third parties is to just have my parents put a downpayment on a house because renting is a waste of money. I wish I had thought about that! Now I just need to work on finding some so-called “middle class” parents who can afford to put down a cool million for me so I won’t be “ho cham”. Sorry mom and dad, you need to be replaced.

  16. Real Tax Payer says:

    Could I please request formally on behalf of all serious commentators that Karen Eliot is blocked ?

  17. Sojourner says:

    “Could I please request formally on behalf of all serious commentators that Karen Eliot is blocked ?”

    Sojourner approves this message.

  18. “Should we be allowed to implement temporary discriminatory quotas and moratoria against [Mainlanders] out of pragmatism? We already do – if you count several decades as temporary – in the form of the 150-a-day limit. Those who take spouses from anywhere else are not subject to a waiting period to bring them here.

    In this regard, is C Law really saying that in addition to suffering the negative consequences of the distorted property market, poor men in Hong Kong should be further punished by being denied the consolations of a normal married life?

  19. C Law says:

    Private Beach, the opinions I quoted were those of the local middle class ladies I dined with – one of whom is my wife. They collectively, like many in HK, have worked very hard to get to their current comfortable positions and have little sympathy for those who have not been so successful. I do not attempt to justify this position, I bring it to the attention of the readers for their consideration, especially as it is, I believe a widespread feeling.

    Nevertheless, I do share the opinion that it is irresponsible to take on commitments that one is unable to afford. If one cannot afford to support a wife should one take on that responsibility, particularly if catching the bride essentially entails a dishonest description of one’s assets and prospects? That goes double for bringing children into the world.

  20. J Hatch says:

    Give the poor in Hong Kong an extra $3000 trimmed from the civil servants pay sounds about right. The money will immediately go back into paying the rent increase the those civil servants who wisely invested in cage homes and sub-divided flats will set up. Never fear that these same civil servants will spot an opportunity to out-source the management of these funds to “non-profit” kwangos that employ their poorer relatives.

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