'Freest economy' costs far more than it's worth

PUBLISHED : Monday, 14 January, 2013, 12:00am
UPDATED : Monday, 14 January, 2013, 3:31am

Newspapers give you the latest news but often not the context. Over two days in different sections of the paper last week, we carried stories about the failure of wage rises to meet price increases in the last decade; Hong Kong again being named the world's freest economy; and property tycoon Li Ka-shing continuing his reign as the city's richest man. I would argue they are different aspects of the same story, the root of which tells us something disturbing about our society and economy.

There is a saying that for a few to get rich, the rest must stay poor. Now I am not blaming Li for being responsible for poverty in the city. But a strong case can be, and has been made that our social-economic system has disproportionately favoured a handful of property tycoons and select property conglomerates over many years at enormous social costs.

We all know these costs when we try to rent or buy a flat. The government's high land premiums and low-tax regime make sure of that. The tycoons also have business tentacles affecting most walks of life. Another cost, perhaps even more insidious, is our enormous wealth gap.

One reason Hong Kong is so beloved of top business bosses - for whom it is a fabulous place to make money - is that the private sector and the government have worked to keep wages down. How low? The median wage has risen less than 10 per cent over the past decade, while prices have shot up by more than 30 per cent, not counting skyrocketing property prices, according to a Chinese University economist's estimate.

For those at the top, the "freest economy" accolade from diehard right-wing think tanks like the US Heritage Foundation and the Canadian Fraser Institute is well-deserved.

For those at the bottom or even the middle, it looks more and more like exploitation and crony capitalism. So those annual think tanks' reports are becoming more and more of a sick joke. For years they have given an ideological cover to the government - not anymore.

Leung Chun-ying is the first chief executive to take on the tycoons and has shown commitment to alleviate housing problems and poverty. For these reasons alone, he deserves a fighting chance in his job.