Most developed economies’ governments are up to their ears in debt, even after offsetting their assets against their borrowings. Japan’s government, for example, owes a gross amount equivalent of over 200% of GDP, which still comes out at over 100% of GDP on a net basis. The Japanese people could freak out and wet themselves, especially as they have one of those oh-so scary aging populations. But they are pretty laid back, if not downright uppity – boosting defence spending and irritating friends and foes alike by visiting war shrines and killing dolphins. One reason is that if you net out household debt in a similar fashion and add it all together, the country is still sitting on considerable real net wealth. Most economies are. (Lots of data on this here.)
A few economies are in the happy position of having a government, as well as households, with far more assets than debt – like Norway or Qatar. Hong Kong is also in this position: the government is sitting on fiscal reserves and other assets totaling over HK$400,000 per household. So in theory, we can be ultra-relaxed. Provided we don’t dive headlong into open-ended universal entitlements, and we encourage the better-off to contribute what they can afford, we have decades of retirement, health-care and coverage against poverty ahead of us, already saved up. The South China Morning Post has done a rough costing of one option.
The expansion in welfare benefits for the poor in Chief Executive CY Leung’s recent policy address should be seen in this context. You can debate whether the family allowance system’s design might distort people’s willingness to work or whatever. But in terms of cost, it’s doable, and no big deal. And yet Financial Secretary John Tsang bleats day after day about mounting fiscal pressures, the need for new taxes (or ‘revenue streams’, as he calls them), and the sky falling in because people are healthier and – horror! – living longer.
We end up playing the same game as yesterday, when the inexplicably stupid official announcement we are invited to take seriously was ‘We will and must have 100 million tourists a year’. The rules are unchanged: explain why this idiot – who gave HK$6,000 to each and every one of us a couple of years back – is spouting such obvious crap.
The quick answer is that he is, simply, an idiot. “It sufficeth me, thou art,” as Thersites replies when Patroclus asks why he is included in a list of fools in Troilus and Cressida. Fans of Occam’s Razor would leave it there.
But there are plenty of other explanations. Maybe he thinks the rest of us are idiots, and he wants to stash our wealth away for some evil reason. Maybe Beijing wants our HK$1.5 trillion as a nest-egg in 2048; maybe the bureaucrats see it as the untouchable guarantee of their own bloated pensions in years to come; maybe the tycoons are plotting to expropriate it in the form of pointless giant infrastructure projects.
We do know that the bureaucrat-tycoon establishment that ran Hong Kong under Donald Tsang in 2005-2012 was obsessed with amassing reserves, minimizing recurrent expenditure and introducing a sales tax. Not just one of them, which you could describe as prudent. Not just two, which would look overly cautious. But all three. You must pay hidden taxes via your and your local shopkeepers’ mortgage/rents, so we can stuff lots of your hard-earned cash (‘windfalls’) into the reserves. And we will do all we can to migrate you away from public healthcare so you pay extra for private insurance cover. And we want to slap an extra consumption tax on you on top of all that.
Maybe it’s just rigid application of 1960s parsimonious, colonial small-government ideology, mindlessly continued by zombie-policymakers into an era of general prosperity and increasingly representative politics. Or maybe it’s pure malevolence, and we are victims of the world’s biggest, slowest-motion, ongoing mugging, by an unidentifiable assailant.
I would grudgingly lean towards the less conspiratorial, more idiot-zombie explanation. No-one’s been able to get John Tsang and his smug, pompous bureaucrat buddies to come down to earth and see this isn’t a world of squatter camps, steaming nullahs and seven-day working weeks in plastic-flower factories any more.
People who prefer to see it as an active and elaborate evil plot (rather than act of omission/accidental arrangement) to enslave us all will be interested to learn that even the most saintly and heroic figures can turn out to be loathsome and sinful if you dig into their past. The trendy trinity of Wikileaks founder Julian Assange, Hong Kong’s adopted refugee-whistleblower Edward Snowden and ex-Guardian journalist Glenn Greenwald are arguably a pretty unsavoury bunch: Assange being (no news, really) a messianic philandering paranoid; a youthful Snowden embracing extreme anti-welfare, pro-gold-standard, gun-nut wackiness; and Greenwald-as-lawyer defending neo-Nazis and racists. So much for (respectively) blond pretty boy, modest hipster-humanitarian-geek and nice noble gay writer. It all puts John Tsang – and the rest of this city – into perspective as, probably, basically harmless but too hung up about the wrong things.
In 2048, if I’m around, i’ll have long since retired to sunnier pastures and will be too old to care if Beijing decides this largesse is to do with as they please.
So I tend to agree with you that the man is a fool and woefully out of his depth. He failed at politics when his MPF 6K backfired spectacularly, Hong Kong workers have long written MPF off as a scandalous con, but he didn’t know. Then, when he tries to connect with the middle class, he spouts off some nonsense of red wine and French films. His budget estimates are an ongoing joke.
He had some health issues a while back so isn’t it time to pension him off so he can continue to talk crap employed by some Property Developer where fewer people would care.
Meanwhile, in breaking news, Hong Kong domestic helpers are being abused.
Besides being a Myrmidon, Old Whiskers is Middle Class. As Mike Rowse points out, not having taxes raised is a bonus by itself for the middle class. To avoid supporting the next badge of aging and seeing some at the bottom rung of middle class fall off in later years, he should spend more effort looking at MPF if he so engrossed in penny pinching.
One thing is certain, Mr. Bowtie trained them well…
Wow! As in great column
I have long been an advocate that these funds are ringfenced for the PRC to swalow in 2048 to save them from the undoubted financial crisis caused by all of the public infrastucture spending / empty new towns / state industry wastage that will occur. Maybe it will all crash even sooner then that!and the HK government will be forced to “lend” the cash to the PRC banks?
The legal system makes great play of such catchwords as “wilfully”, “deliberately”, “with aforethought”, “conspiring to”, but such attempts to read people’s minds, like trying to say whether John Tsang does what he does on purpose or merely accidentally, are surely largely beside the point, if not alien to the local mindset.
Stephen, I note with some amusement but also much sympathy the attempts of your namesake, Mr Vines, to run a viable business — perhaps a lesson for us all?
To be fair, it’s merely to replace the funds that everyone knows were spirited out via the HSBC tunnel by the departing devils.
Don’t we need to save for a 3rd, 4th, 5th, 6th… runway at the airport – with the eventual aim of extending it all the way to Macau?
More seriously, what is wrong with Glenn “Greenwald-as-lawyer defending neo-Nazis and racists”? There are certainly aspects of Greenwald’s character and behaviour that are questionable, but in a fair legal system, even scum are entitled to a competent defence lawyer. If we decide their guilt in advance of trial, we may as well give up on the rule of law and adopt China’s system.
My thoughts about Greenwald too. Surely, at least part of the quality of the nature of a country’s legal sytem is how well it defends the prima facie guitly and obvious scumbags, especially those unable to afford the help of expensive lawyers.
Don’t worry, this is on Hemmer’s list. I’m sure. A friend of my helper’s was telling me on Sunday about the treatment she suffers on a daily basis. It’s not brutal, it doesn’t cause mental scarring, but it’s incessant low-grade crap 24 6 and a half – be back before 8pm after you’ve done all your chores and washed the car. And no you can’t wear gloves to hand wash all the socks and underwear. (Why handwash? “Because they might be damaged in a washing machine”). Location – at a very prestigious, elite, de luxe, exclusive residence on The Peak.
I have long since come to the conclusion that the man is simply a total idiot all the time rather than half the time as is normal for a top civil servant
Perhaps it’s CY’s Machiavellian strategy to keep him on simply because he is such an overt fool and everyone knows it, so we all disregard everything he says these days ( in fact, ever since the absurd $6K handout )
CY has to have a FS because HK has always had one. So better to have a duffer like whiskers Johnny who can’t do much harm even though he does no good than a real FS with some brains who might start doing and saying things that really oppose what CY wants to get done financially.
After all, if Tsang keeps saying “save money” and CY insists on spending money it kind of makes CY look good in a twisted sort of way. Well sort of !
Anyway, we already had this years REAL budget speech in case no-one noticed: it was called the CE’s policy address ….
Hemlock, nobody is perfect and that includes you.
Why are you denigrating Assange, Snowden and Greenwald ? They have done, and are still doing, outstanding things, for unselfish reasons.
Your comments are in the same vein as that moron US politician who insinuated yesterday that Snowden is hand-in-glove with the Russians.
My wife’s a former helper – I know all the stories! Your helper’s friend is one of the lucky ones!
Looking forward to Hemmers having a go. This is what I wrote to the SCMP today:
The facts are that the Hong Kong laws governing domestic helpers are flawed and/or not enforced. That has nothing to do with race – it’s simply so. There is not enough space here to discuss how but reading other posts/articles will clarify what I mean. The laws basically give the helper no chance when up against her employer, her agency and the indifference of police and Immigration.
Anyone who has had anything to do with domestic helpers other than as an employer will know that cases like the current cause celebre have been going on for years and the police and immigration have just not been interested. I went some years ago to Immigration with a list of eight grievances that a helper had against her employer. Result? – one day extension of the 14 day rule, but no interest in exploring further.
Letters to the newspapers – if published – simply result in a chorus from the “if they don’t like it, let them try Malaysia/Saudi Arabia” brigade. And they’re correct in that Hong Kong is better than some other countries. But that excuses treatment like this?
Here are two specific comments on the laws as currently not enforced in Hong Kong.
1. The helper is entitled to her own space – in the contract. Now anyone with half a brain knows that this is impossible in most HK apartments, unless the family is limited to two or possibly three people. Nonetheless, the Immigration Department happily issues permits to such families who clearly cannot fulfil this law’s requirements.
Solution: the Government has a record of the size of almost all apartments in Hong Kong and who lives there. Any doubt about the apartment’s suitability, and the potential employer should be questioned.
2. Under the Labour laws, all employees in Hong Kong – and it’s specifically in the helper’s contract – are entitled to a full 24 hour rest day. Here’s an experiment: go to Central, Wanchai or Causeway Bay MTR station at around 7:15 on a Sunday evening. Watch the passengers rushing by – mostly domestic helpers on their way home.
Why are they rushing? Curfew! They have to be home by (usually) 8 or 9 or they’re in trouble. Engage a couple of them in conversation – it’s not hard – and confirm my assertion. Then ask what time they finished work that morning. Most will have not been allowed out until 8am or 9 – after they set the family up for the day. So they actually get 12 hours maximum rest.
Everybody knows this – nobody does anything. The current case seems to be drawing international attention. Maybe something will be done – but I doubt it, since the HK Government has wilfully ignored both the UN and Amnesty International when those organisations have drawn attention to slavery – yes, that’s what they call it! – in Hong Kong.”
Asia’s World City, eh?
Too right – all too right !
I know of several perfectly respectable families where the Amah even has to sleep with the kids because there’s no other space.
The answer is surely to legalize the live-out option.
Personally, our family opted for this from the very beginning whether it’s legal or not because :
a) we simply don’t have space for an Amah’s room
(very basic fact of life !)
b) we feel an Amah is a person who deserves her own private life when work is finished and should not be “restricted to quarters” when work is over
c) frankly, we prefer not to have our Amah around in the early morning and late evening
Thus our Amah does indeed have a full rest day . She clocks off mid -evening Saturday and only re-appears Monday AM.
I guess she is one of the lucky ones.
But her outside accommodation costs nearly $3K p.m , which is 75% of her salary. And probably it’s also not legal that she lives outside, although we have never been investigated by immigration.
So in summary, what we need is
1.Legalize the live-out option by mutual agreement ( employer/ Amah)
– thus Amahs are free only to accept contracts with live-out accommodation , albeit that restricts their choice of empoyers
2. Legalize and enforce building and safety standards on Amah live-out accommodation , thus making it an open and fair “industry”, and in doing so improving quality and (possibly *) reducing prices
* At present the live-out accommodation exists in a twilight grey legal area , thus can charge premium prices.
Looking at the houses on sale in The Beverly Hills development in Taipo, I noticed that most of them do not have a maid’s room, even though those who can afford this type of property will almost invariably employ a domestic helper. No doubt the same is true in many other new properties.
“Small” “indigenous” houses sometimes have aircons in the bathrooms; or a small antechamber is carved out of the empty space near the doorway. They could of course be for pets, but…