Only half marks for history

PUBLISHED : Wednesday, 09 August, 2000, 12:00am
UPDATED : Wednesday, 09 August, 2000, 12:00am

Many people these days do Karl Marx an injustice. They regard his 19th century formalisation of communist thought as wrong on every count. It was not. He had a very keen appreciation of the social problems of his day. The difficulty was that he thought more state control the remedy when subsequent events have proved less is the way to go.

But who are we to criticise him in Hong Kong? A less formalised brand of Marxist thought (in other words, less well thought out) is alive and well in the Housing Authority - complete with that Marxist attribute of having at least defined some of the problems correctly.

'We have nothing to be proud of in our property market,' says Housing Authority member Rebecca Chiu Lai-har. 'Our flats are among the most expensive in the world but the space standard is one of the lowest.'

Well done, Ms Chiu. It may be obvious but it is worth repeating.

Old Karl would have been proud of her prescriptions for putting things right. She wants to set up a new high-powered housing board to take charge of policies and ensure that 'abnormal and unhealthy' speculation is avoided in the future.

This new board would monitor market conditions, consult other government bodies and map out strategies to react promptly and efficiently to irregularities. Count them - more meaningless thoughts and buzzwords there than you can find in an hour's worth of television commentary.

Let us get one thing straight right away. You cannot pin the blame for high property prices on speculators and developers any more than you can pin the blame for an arson attack on the lighter fluid the arsonist used.

Developers did not create the conditions that have distorted our property market. They only took advantage of them. The conditions were created by government land-use policies and this, in fact, is the way it is around the world.

Property development everywhere is a game of playing money against government regulations to get buildings up. When it does not work as it should work the first stop for complaint is how government has set up the game.

In our case it has been with a very heavy element of direct state intervention in housing and a big government bill charged up front to anyone who wants to redevelop property. The result is that we discourage private initiative, concentrate the industry in a few hands and get chronic shortages and high prices.

But whenever anyone in Government has recognised things are not going right the result has been more boards, authorities, bureaus, directorates and committees and invariably they recommend the same thing - more rules, more intervention, more attempts to dictate prices to the market. Marx would have been proud of them.

No high-powered board, however, can succeed in understanding the countless influences on something as complicated as provision of housing and give each its proper weight. The only thing that has ever succeeded in balancing them all is that mindless fulcrum of price in a free market. Ms Chiu and her sort cannot 'monitor' market conditions. There has never been a human brain that can hold and correctly analyse enough information truly to know whether the market at any time has things right or wrong.

It is pointless of her to talk about a board, particularly one heavily made up again of academics and know-nothings in property, reacting efficiently to irregularities. Millions of investors seek every day to take advantage of market irregularities and fail. How will her board even know what an irregularity is?

One thing is certain, however. When Ms Chiu says 'we are still doubtful whether similar situations will happen in the future' there need be no doubt at all. They will happen as sure as day follows night if we adopt her quasi-Marxist band-aid proposals and ignore yet again that Government's role in property is to provide a structure that gives market forces the greatest scope for free play.