The past is gone - spending HK's cash won't bring it back
with Jake van der Kamp
Consequently, while both Singapore and Shanghai were aggressively expanding their positions as international maritime hubs, if Hong Kong continued to do nothing, ultimately it would lose its status as a global maritime centre, [they] said.
SCMP, Nov 27
The 'they' here are four maritime industry associations of the sort that are established to be functional constituency voters. They want government to wave its magic wand and bring back the good old days for ship registration, broking, chartering, finance, arbitration, manning, etc.
If you can't find 'magic wand' in the dictionary, look under 'money', as in yours and mine, not their own. They are smart enough to know that if they sink their own money into this, it will soon be sunk indeed, bubble, bubble, bubble, all gone. Let's use public money instead, they say. Brilliant idea. Guess why.
I've had a go at this one before as an exercise in waste and I expect I will again but let me take it from a different angle this time.
In gross domestic product there is component called private consumption expenditure. That's you with your own money in your own pocket to do with as you please, even spend it on things that your mama warned you against.
It is the payoff for all the trouble you go to in having a GDP in the first place. Good as it may be to know that a great deal of money is being spent in your economy on building roads and offices, or on public administration or on increases in inventories and surpluses in trade, if it makes you no more prosperous what's the point?
In the end all this investment in the other components of GDP should be there to serve you. If it does not eventually facilitate personal consumption expenditure, then it does not serve you or, at least, serves you badly.
Now look at the chart. The red line at the top represents Hong Kong with personal consumption expenditure at 62 per cent of GDP, a ratio that has been relatively steady over the years and is generally in line with the norm for prosperous societies.
Next, look at the blue line. That's Singapore with personal consumption expenditure at only 36 per cent of GDP, the lowest it has ever been. It is what you might expect of an emerging economy that has its infrastructure still to build, not one that should long ago have built enough and now likes to preen itself on its accomplishments.
The ratio for Shanghai is also very low and I mention it because our story cited both Singapore and Shanghai as contrasts to Hong Kong. Singapore is the most significant here, however, and it is so because of an analysis of Singapore's economy done a few years ago by two American economics professors, Paul Krugman and Alwyn Young.
These two pointed out that Singapore's government-led economy does poorly at getting any bang for its investment buck and has to invest much more than Hong Kong to get the same return.
You could subsequently be excused for thinking that the entire National University of Singapore had been commissioned to prove Krugman and Young wrong. The bureaucrats were incensed, the daily newspaper, Pravda (Party Rendition and Authorised Version of Daily Announcements), screamed in rage.
I now refer you the chart again. There you have the evidence, steadily less bang for its investment buck, the figures from Singapore itself. Krugman and Young were absolutely right.
And what made them right is what the Singapore government does wrong, which is using public money to make strategic investment choices on the basis of what the winners were 20 years or more ago and then sticking with these choices long after they have proved to turn into complete losers.
It is one reason why the argument that Singapore does something is a good argument only for us in Hong Kong not to do the same thing. I'm sure it's also true vis-a-vis Shanghai but that's another story.
The maritime industry is dynamic, constantly evolving and itself as rootless as a ship. It can go anywhere as easily as it comes there and it no longer finds conditions in Hong Kong as congenial as they once were. We have become rich but many of the businesses that comprise the maritime industry are better suited to poorer places.
If that is what Singaporean bureaucrats again wish to make their city, so be it. Let's hope ours are a little wiser.