Heritage Foundation warns against ‘free goat’ threat to liberty

Today is the day of Hong Kong’s annual Policy Address – a contrived ritual that is no less a colonial hangover since Chief Executive CY Leung moved it from October to January. Leaked mutterings suggest that we will see more movement towards a comprehensive, welfare-based approach to tackling poverty.

Past administrations have only reluctantly acknowledged the growing gap between rich and poor, and God forbid that officials should try measuring or analyzing it to find out the causes. (Best guess: partly plain everyday globalization, amplified by a massive amount of artificial economic distortion via land, fiscal and migration policies.) Officials’ usual response has been to launch PR campaigns, such as (to dream one up on the spot) a Jockey Club-funded pilot scheme to give 200 families in Tin Shui Wai a free goat each to encourage self-sufficiency.

CY came into office promising to get (relatively) serious. Despite extreme hostility from tycoons demanding their customary privileges, pro-democrats who cared only about abstract political structures, civil servants stuck in the 1970s and activists refusing to accept anything less than a ruinous universal pension, he pushed through a lightly means-tested allowance for the elderly poor that boosted recurrent welfare spending by 14%.

The word is that CY today will announce a subsidy for poor families – one that apparently exceeds Oxfam HK’s careful and sensible pre-Policy Address proposals. This could help correct one of those bizarre anomalies everyone takes for granted, namely the fact that the rich get a handout for each child (via tax allowance), while the poor don’t.

Even without anything like European-style cradle-to-grave protection, Hong Kong’s welfare and broader economic systems are already riddled with hidden cross-subsidies and warped incentives. For example, without a higher statutory minimum wage, employers may be able to grab higher allowances for the working poor through pay cuts; meanwhile, cartelization and land policy impose automatic subsidy of the rich by the poor. No-one wants to gauge the impact of structural factors like open-ended immigration of less-skilled Mainlanders or the barriers to advancement and opportunity erected by the education system.

By coincidence – presumably – the Heritage Foundation chooses this time to declare the Big Lychee the Freest Economy in the Solar System for the 20th year running. The Hong Kong government greets the news with its usual enthusiasm, but the days when everyone else jumped up and down with excitement are over.

How do you manage to meet the criteria for Freest Economy when your domestic markets are cornered and manipulated by half a dozen property moguls who crush competition and exploit consumers? Answer: ‘Freest Economy’ means the economy with the government that gives such parasites the most leeway. Which leads to the obvious question: why be ‘Freest Economy’ if it makes most of the people poorer?

The South China Morning Post looks at how Hong Kong-style economic freedom has delivered less prosperity than some variants that stray from the Heritage Foundation’s dogma. Behind its grave warnings about Singapore snapping at our heels, the Heritage Foundation itself has become irrelevant. There was a time when the think-tank offered practical market-based solutions to political and economic problems. In the late 80s, it proposed a way out of the USA’s growing healthcare dilemma, through compulsory universal insurance. The principle was developed by Republican governor Mitt Romney in Massachusetts and purloined by Barak Obama. Since then, the Foundation has pretty much reversed itself and become the sworn enemy of the idea – now known as the Socialist Kenyan Obamacare Menace. It launched an activist arm, hijacked by a rabid rich-kid called Michael Needham who has cost the Republican Party dearly by getting Tea Party extremists to harass GOP lawmakers into trying to shut down the US Government to derail the policy.

Somewhere along the line, dependable old Anglo-Saxon pragmatic empiricism (‘go with whatever works’) gave way to a fanatical Continental devotion to ideology (‘yes, but does it work in theory?’). The Heritage Foundation has lost it. A pity, given that Hong Kong’s Policy Address could use such ideas as a negative income tax or school vouchers.

The Foundation still has a hard-headed, down-to-earth, no-nonsense approach to foreign policy: warnings of Beijing-produced political-military turbulence ahead, scrutiny of how Chinese rhetoric on nuclear weapons is becoming increasingly provocative, and the need for regional democracies to unite against the Mainland’s unreasonable territorial claims via a Pacific version of Mr Rogers’ Neighborhood. Not sure what CY would think about these, though.

 

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12 Responses to Heritage Foundation warns against ‘free goat’ threat to liberty

  1. maugrim says:

    No-one wants to gauge the impact of structural factors like open-ended immigration of less-skilled Mainlanders or the barriers to advancement and opportunity erected by the education system.

    Wow, there’s so much to consider in today’s update, that is a good summation of some of the complexities that exist.

    The selected paragraph alone, reveals a pandora’s box, for example, the growing income gap and the percentage of new arrivals from the Mainland who require Government financial assistance. Who is creating such a problem and why, is ignored as being the panda in the room. With regards to jobs as an advancemnt of opportunity, I would go one step further and say its not so much the Education system’s fault but that of the Government, who by their narrow resource allocation policies create only a few fields in HK that an aspiring HK graduate can enter if they want to work 60 hours plus per week to be able to afford a modest flat at some stage in the NT; engineering, real estate, accounting and law. Most, apart from law, bear the paw-prints of Government resource and policy decisions.

  2. Gin Soaked Boy says:

    Well, Long Hair has pulled his usual stunt to avoid listening to the CE. He was carried out to an awaiting wheelchair whilst hurling a torrent of abuse. So, no change there.

  3. Stephen says:

    @GSB,

    Long Hair has been a one trick pony ever since he got elected into the Legislature. He is no more than a protest vote by electors knowing he has no real power to do anything but disrupt. If he did I doubt he would be elected.

    However he has a mandate which is far more than many others in that chamber today.

    If CY and the CCP, through Brit Carrie, Rimsky 45 and the Bald Fellow, get their way I forsee Long Hair and the other protest vote candidates having long legislative careers.

  4. Grog says:

    Well, bugger all in the policy address for the middle class – ie the taxpayers – to get excited about.

  5. Jeff says:

    Subsidizing employers who pay slave wages with a new handout from the middle class, so that they can keep on paying slave wages. Fuck off.

  6. PCC says:

    It’s Barack to you, fella.

  7. Exactly, Jeff – if wages aren’t enough to live on, then the minimum wage is set too low. Government subsidies to the working poor give mean employers an unfair advantage over those businesses that pay a decent living wage – at our expense as taxpayers.

    Now that is a real bizarre anomaly. Child allowance, by contrast, is easy to justify – if people are taxed according to what they can afford (which is the point of a graduated system), then those who have children to feed and educate have less residual disposable income, and are therefore asked to pay less tax. No anomaly there.

  8. PCC says:

    @PB – Sorry, I don’t agree. Minimum wage should be about preventing rank exploitation, not to provide a living wage. There is a difference. You’re talking socialism, income redistribution, each according to his needs, equality of outcomes, etc.

  9. Ex Tax Payer says:

    ‘Freest Economy’ means the economy with the government that gives such parasites the most leeway. Which leads to the obvious question: why be ‘Freest Economy’ if it makes most of the people poorer?

    Hemmers at his best !

    So the poor get $2,000 in stead of $1,000 (or whatever) but we still all pay homage and daily tribute to the great tycoon-gods, starting with LK Zeus, and may they forever rule freely in our polluted heavens.

  10. @PCC – in my view, not paying full-time workers enough to live on IS rank exploitation. If you want to brand that as socialism, I plead guilty.

  11. PCC says:

    @PB – Fair enough, we see things differently. However, a lot of minimum wage earners are part-timers and students (for example, 60% in the UK; I don’t know the figures for HK). This is their entry point into the world of work. It is not intended to provide them with a living wage. Raising the minimum wage rate encourages employers to find labor-saving devices and methods to reduce their wage bill, or in any case seek ways to do without the part-timers and low-wage workers, which cannot be a good thing for the workers themselves.

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