Here’s the real question that should have been put to Li Ka-shing
The soft-ball approach in a recent television interview with the billionaire was a missed opportunity to delve into important issues
Someone once asked me what question I would like to ask Hong Kong’s richest man Li Ka-shing. I replied, “What have you done to my city?” He and his companies are responsible for much of the economic hardship levied by numerous cartels that plague and infest Hong Kong. Making life difficult for average people and raising the cost of doing business for those of us who are not landlords.
The consequence of living in our so called “freest economy in the world” is that the endgame of free for all, survival of the fittest competition without government intervention is a debilitating concentration of wealth and power that cripples economic development beyond the status quo.
From squeezing obscene profits out of the property market where Cheung Kong’s 200 square foot flats are sold as places where actual families are supposed to live in with rooms you can barely fit a single sized mattress into, to controlling (along with Jardine Matheson) the city’s grocery business, to the container ports and electricity, his Cheung Kong Group controls too much of the local economy.
In Hong Kong, the ardent advocates of our supposedly business oriented, pro-capitalist society think that it represents a unique sort of healthy subculture- a forgotten world beyond the clutches of the kind of government meddling and welfare society dead hand that plagues modern times.
That makes Li’s recent interview on Bloomberg TV seem like a public relations exercise anchored in a more nostalgic time when Li was revered by Hong Kong people as “Superman”, a hometown capitalist hero. Today, the peoples’ perception is what is good for Cheung Kong simply must be bad for Hong Kong.
Instead, Li is asked (yet again) about his famous preference for inexpensive watches. That self-deprecating, comedy routine was quaint and endearing- back in 1989. But, more serious questions should be asked. Hong Kong is not only mired in an economic slowdown, but facing challenges where Li’s business practises contribute to economic sclerosis. An illusion of good journalism is to only ask questions you know the answers to.
Li now suggests that profits tax should be raised. If this is what counts for serious public policy discussion then it shows how backward public policy development is in Hong Kong. But, don’t forget this is a city where the Financial Secretary, John Tsang, handed out HK$6000 to every citizen because he couldn’t think of a single sustainable social programme to develop.
Hong Kong now has a new Competition Commission, but it is powerless to take on the monopolists simply because it is too dependent on whistle-blowers or voluntary disclosure to reveal illegal cartel activity.
What Hong Kong really needs to break up its cartels and oligopolies is a pro-active European Union style competition law and commission. It would independently investigate the maintenance of competition by regulating anti-competitive conduct by companies. Real reform requires the ability to bring charges against cartels and monopolies that would damage a society’s economic and cultural interests.
Main policy goals would include preventing market dominance or preventing the abuse of firms’ dominant market positions. The commission itself would be tasked with tracking down and punishing those in breach of competition law and investigating suspected infringements. Like the European Commission, it would possess wide, on-site, investigation powers.
The tyranny imposed upon our economy by Li and other tycoons represents a long term, perpetuated and entrenched culture of systemic collusion with government. Of course they would be insulted if you insinuate this undeniable and shameful fact in front of them. Economic rent collecting is how they have successfully done business for decades and it is as natural and necessary as breathing.
It is also similar to prevailing business culture and widespread practises operating in China for over three decades producing numerous Chinese billionaires. The top 2 per cent (28 million Chinese) consumed 35 per cent of all luxury goods and services produced worldwide in 2014, while more than 70 per cent (1 billion citizens) live at or below subsistence level. Correcting this is necessary for achieving any semblance of social stability.
Mitt Romney was referring to Donald Trump when he cruelly paraphrased John Adams: “Every democracy commits suicide. There never was a democracy yet where the people didn’t vote themselves into oblivion.” Hong Kong’s version of freedom- a laissez-faire market, has resulted in oppressive market serfdom. Brexit demonstrated resistance to the EU’s undemocratic socialism. Paradoxically, some version of strong and empowered socialism is needed in Hong Kong to correct abuses by tycoons.
Peter Guy is a financial writer and former international banker