Tsang let the Gini out of the bottle
Donald Tsang Yam-kuen has, perhaps, finally understood where he failed. The grilling and humiliation the retiring chief executive suffered in the legislature last week marked a sad ending to a public career spanning more than four decades. He has taken care of the wealth of Hong Kong, but not its wealth gap.
'Before, I always believed you only needed to make the economy grow, to make the pie grow bigger ... and every level of society could benefit,' he told lawmakers. 'But theory and practice are not the same.'
To understand why he has become so disliked when the city's economic fundamentals remain strong in the face of terrible external forces, you only need to look up the latest income inequality figures provided by the government. The city's Gini coefficient - a scale from 0 to 1 that measures income inequality - is now the highest in the developed world. It has reached 0.537 based on income data from 2011. It stood at 0.533 five years ago and 0.451 in 1981. It's the age-old phenomenon of the rich getting richer and the poor getting poorer. The poorest 10 per cent have less money in their pocket today than five years ago, while the wealthiest 10 per cent earn a median HK$95,000 a month, up from HK$76,000.
The super-rich, whose wealth is closely tied to the property market, get richer in proportion to the swelling of the government coffers. As the government owns all the land, by limiting land supply Tsang pursued a high-land-value policy that tied the fortunes of the government to those of the big developers and the property market. At the same time, inflation and high property prices burden the poor and the middle class. At 7 per cent last year, inflation nullified what little positive effect the minimum wage law has had on the poor.
We can't blame our extreme wealth gap and social inequality completely on Tsang and his government. Income inequality is a pervasive phenomenon across the entire developed world since the last wave of globalisation, the free flow of capital and the rapid expansion of international finance. But Tsang stands as the local symbol of a global problem that must be addressed.