The superiority of private-sector propaganda

TankmanYangtze

China’s massive on-line, print and broadcast censorship apparatus must be working overtime today. Not only is it the 26th anniversary of the day no-one remembers when nothing much happened in Beijing, but there are heroic rescue workers on the Yangtze to laud intensively, and some other stuff to ignore, for another 48 hours before the Eastern Star disaster is neatly faded out from the headlines and collective consciousness.

Hong Kong’s propaganda scene is more patchy.

Just when we were all finally agreeing that the political reform package was Dead on Arrival, Chief Secretary Carrie Lam launches another round of meetings to beg pro-democracy lawmakers not to kick the proposal out. This follows last weekend’s gathering at Shenzhen at which Beijing officials essentially told the same lawmakers that they and their city were treacherous pieces of crap and would never have anything other than fake democracy. What can Carrie – who has long struggled to sound persuasive on this issue – add?

Any remaining shred of credibility in the proposed reform is crushed by property tycoons voicing their support of it. Li Ka-shing joins the others, and claims that rejection of the reform will hit the Hong Kong economy. He offers no evidence for this. If, by ‘economy’, he means the landlord-centric, tourist-cramming, rent-seeking baloney of recent years, we can only cheer.

In fairness, Li seemed to be reciting this line out of duty rather than conviction. He sounded more genuine when invited to encourage people to buy property – as we all would in his shoes. This is where private-sector, thus far more efficient, propaganda takes over. People are reportedly desperate to pay HK$12-13,000 a square foot for (other developers’) apartments of less than 300 sq ft in some mosquito-infested fringe of Yuen Long, so Li does not have to overdo it. But he cites current construction costs as a reason why prices cannot fall…

SCMP-BuyIfYouCan

Can you spot the fallacy here, boys and girls?

Let’s say for the sake of argument that construction costs plus materials plus land costs plus developers’ modest and thoroughly deserved margins do currently add up to HK$12,000 per square foot. Today’s high costs are pretty recent (and partly due to artificial distortions like government over-investment in infrastructure, tight land supply, etc). The vast majority of our housing stock was built over the last five decades at much lower cost. An owner who bought a Yuen Long flat 30 years ago would be making a nice profit selling it today for just HK$3,000 a square foot.

More to the point, the production costs are irrelevant if supply and demand shift enough. If sea levels rise and Yuen Long is flooded, the developer won’t be able to sell apartments there for HK$500 a square foot, however much he paid for the concrete and labour. Li’s rule certainly doesn’t work with commodities like food, precious metals or oil – the prices of which historically often fall below the costs of production. The idea that apartment prices are ‘underpinned’ by today’s (bloated) construction costs makes sense only in the context of a rigged market, especially when it’s well into bubble territory. But this is Hong Kong property-tycoon propaganda, coming from a parallel universe where it is against the laws of nature for a producer to ever sell at a loss, and it works better than Xinhua could ever wish for.

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9 Responses to The superiority of private-sector propaganda

  1. NIMBY says:

    It’s more likely we’ll lose 80% of our freshwater supply to rising sea levels long before those Yuen Long flats become coveted beach side property. And just like (lack of) housing for youth, the government has its head buried deeply in the CCP buttocks on this risk.

  2. When analysing housing costs, don’t forget that the developers own most of the big construction companies as well. Nor that many of them are sitting on land banks acquired years ago at prices far below today’s.

  3. PD says:

    Carrie’s very obstinacy creates a slight worry in my mind that somehow the anti-democracy law might squeeze through.

    It’s true that these days you can’t find decent tradesmen to fix property, as LKS himself found out while (re-)constructing his bullet-proof mausoleum-cum-FSV eyesore. Presumably he plans to conveniently die before his prognosis about the unsinkable property market can be shown to have been terminally stupid.

  4. Monkey Reborn says:

    Oops meant to post my comment on today’s blog:

    LKS’s crypt is bullet-proof, in order to protect against: a) its eventual, inevitable defilement at the hands of angry HKG youf, eager to destroy artefacts of the old order; b) to give the second and third generation Tim-nice-but-dims and Dick-nice-but-thicks somewhere to cower, during the inevitable political transformations, with or without implementation of lamppost-centred reeducation.

    Oh the irony of the educated, “real” liberal democracy-seeking HKG young people (i.e. democracy as a means to transparent, accountable and responsive representation), engaging in class-based, “subversive”, underground, grassroots mobilisation against the capitalist-crony class of Hong Kong, supported by and allied with (for now) the original subversive underground class-based grassroots mobilisers of Asia, the CCP, in order to further facilitate their uber-capitalist exploitation of the “underclasses”, the dismantling of the social fabric of their own national polis, and the destruction of their natural environment and exhaustion of natural resources …

    and every fucking word coming out of everyone’s mouth is such an obvious, inauthentic, disgusting and blatant lie, except for the angry kids, who for all their political naivety and fragmentation, “at least they are playing from their fucking heart man, making music with their fucking soul”, to paraphrase the late, great, prophet of our times, Bill Hicks.

    Sometimes (pursuant to, not contemporaneous with my weekly adventures on LSD airlines) i feel i live within a drab, made-in-Shenzhen, Chinese-faux version of a Kafka novel universe … at least the US, China and that lot have the decency to build and enforce the deep state of big data management and exploitation in a serious, menacing, corporatist-fascist manner (with varying levels of effort and success at PR pitching of the same based on “national security”) … all we get in Hong Kong is ridiculous, laughable intrigue; telegraphed political machinations; and exceptionally poor, constantly and consistently-backfiring, transparent attempts at manipulating public opinion and social engineering, worthy only of inclusion in an Austin Powers film.

    The King is Dead! Long Live the King!

  5. Cassowary says:

    1. If we take Li Ka Shing at face value and assume that the reform bill will hurt the economy, then property prices will do what they always do in a recession, which is fall. In which case anybody who wants affordable housing should be praying for the bill to be rejected.

    2. People are falling over themselves to buy brand new, insanely overpriced, 300 square foot shoeboxes because nobody can get the financing to buy a reasonably priced, 40 year-old, 600 square foot flat. You can’t get a mortgage on an old flat, or even if you can, it’ll have a ridiculous downpayment, repayment period and/or interest rate. They want you to buy the ridiculously overpriced new shoebox so that they can make money both coming and going – once on your mortage, and then again on the developer loan.

    3. There’s the theory that Carrie might trying so hard to convince the democrats to vote for the package because she’s surreptitiously trying to save them from themselves. When the package goes down to defeat, the next trick up CY’s sleeve will be gerrymandering. He can redraw the electoral districts and change the proportional representation system with a simple legislative majority because it doesn’t involve the Basic Law. Then it’s bye bye pan-dems, hello Article 23.

    This theory might be wrong. People said the same thing back in 2003 when Regina made those comments about Hitler being democratically elected and taxi drivers being too stupid to read the Article 23 bill. Some thought she was deliberately sabotaging it, because why else would anyone say something so offensive? We’ve found out since that she actually just is an awful human being.

  6. reductio says:

    @Monkey Reborn

    Wow. Very eloquently put.

  7. Hugo says:

    KS Li is simply toeing the Marxist economics line, espousing the labor theory of value.

  8. Knownot says:

    The newly built monastery where Li Ka-shing will be buried.

    From The Deserted Village by Oliver Goldsmith:

    “Unwieldy wealth and cumbrous pomp repose.”

    ———————

    The day no-one remembers.

    From London Review of Books, 5 July 2007. (Some readers of this blog will know this already.)

    On June 4 this year in Chengdu, the small-ad pages of an evening newspaper contained a short item: “Salute to the steadfast mothers of the 4 June victims.” The entry was noticed by some readers and uploaded onto the internet. The authorities jumped to investigate. Within days, three of the paper’s editors had been fired. How had the wall of silence been breached? The girl in charge of the small-ads, born in the 1980s, had called the number given by the person who placed the ad to ask what the date referred to. Told it was a mining disaster, she cleared it. No one had ever spoken to her about 1989.

  9. anon says:

    1. Tiananmen remembered… Good: Anti-corruption
    2. ?Shanghai massacre ?Nanjing massacre ?Jap invasion to try destroy the Chinese race…SIGH…All forgotten? Almost funny, that memory can be so selective!
    3. June 4, today, maybe we should also spare a thought, for Shanghai Massacre survivors, who went on to heal the Chinese nation? Thanks to them, China (therefore HK also) is now no longer an international laughing-stock!
    4. Every Chinese person has paid a price for that long-sought Restoration: millions paid with their lives. Middle classes only paid the price of asset-loss: property, money etc. We kept our lives. Maybe we should also keep ALL our memories?

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