Hong Kong shouldn’t sink another HK$5.45 billion into the Disneyland black hole
Commerce minister Greg So’s claim that we will lose HK$31.6 billion if we don’t invest in revamping the theme park is just smoke and mirrors
In a desperate attempt to press for Finance Committee endorsement, commerce minister Greg So Kam-leung told lawmakers yesterday that a risk test showed the city could lose up to HK$31.6 billion in economic benefits over 40 years if Disneyland’s visitor numbers shrank by 15 per cent.
Sunday Morning Post
When senior bureaucrats cannot get their way with Legco’s finance committee they routinely reach into their toolbox of delusional tools to bring out the biggest delusion of them all – economic benefit.
Greg So has now also come up with a bit of additional smoke and mirrors called “risk test”. This piece of abracadabra shows him, he says, that if we don’t sink another HK$5.45 billion (US$700 million) down the Disney hole, and right soon too, we will lose HK$31.6 billion.
Wow, risk test. Isn’t that what bankers do to check whether their loans are sound? That sure is impressive. It must be true then. And if we can save HK$31.6 billion by putting down HK$5.45 billion, well, that’s a no-brainer.
Did he fool you?
Here is how economic benefit works. When you spend HK$10 to buy this newspaper, you effectively pay people like me who then spend that HK$10 at the shops, which means the shopkeepers have an additional HK$10 to pay their suppliers who in turn then have HK$10 more to pay their school bills, which means the teachers have HK$10 more to pay their rents and so on.
Thus by spending HK$10 you create a multiplier effect that brings about HK$50, or even HK$100, of subsequent spending. You have thus created HK$100 of economic benefit, you wonderful person.
It’s absolutely true, but what Greg So forgets is that it happens whenever anyone spends money. Whether you use that HK$10 to buy a bowl of noodles or an overpriced doll themed on Disney’s latest movie, you get that same multiplier effect as the money cascades down through the economy.
It therefore gives you no more of an argument for Disney than it does for the bowl of noodles or for my favourite economic benefit cause: the one in which we build five tunnels by hand from the southern tip of Lamma Island to Antarctica. The project would create a great deal of employment (five tunnels, remember, and all with tools no more sophisticated than pickaxe and spade).
It would also be very secure employment. These jobs could last forever. If we ever finished building the five tunnels we could build five more.
And it would all constitute fixed capital formation, the very best kind of gross domestic product, down in the books as solid investment, every cent of it.
What’s more, when the workers are paid – and we’ll pay them well – they won’t just fritter the money away on fancy foreign imports and foreign holidays. These are working people. They will spend it in Hong Kong. Just think of the economic benefit.
Yes, of course this is absurd, but it will still give you as much economic benefit cascading down through the economy as will Disney or the noodles.
It’s no different in government from how it is in your own personal spending. You do best to buy what you most want or need at the lowest prices you can get.
So it is in government. And a loss-making amusement park centred on worn-out Hollywood themes with control of costing firmly in the hands of a Walt Disney Company that is also busy undermining us with mainland competitors does not constitute what we most need at the best price we can get.
I think Greg So knows it, which is why he resorts to the vapour of economic benefit rather than arguing for the additional Disney investment on its own merits. It does not have much in the way of merits.
We do not lose HK$31.6 billion by turning him down. If we spend the money on something else we just pick up that HK$31.6 billion of economic benefit from the other way we spend it.
In fact there is one way in which we could gain magnificently by turning him down. That Disney park along with its attendant hotels and other facilities covers 1.3 sq km of good seaside land.
Housing is our big problem, isn’t it? Do I need to make the connection?