Jake's View
PUBLISHED : Sunday, 09 February, 2014, 2:56am
UPDATED : Sunday, 09 February, 2014, 2:56am

Functional constituencies undermine our economy

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.
 

Professor Wang Zhenmin, dean of law at Tsinghua University and a former member of Beijing's Basic Law Committee, said last month that the city had to uphold the interests of businessmen to protect capitalism and meritocracy as it moves toward universal suffrage.

SCMP, Feb 6

Professor Wang was not the only man from Beijing to deliver this finger-wagging message last month, and more of them will do it again this month. It only goes to demonstrate that they don't understand businessmen or capitalism.

The greatest threat to capitalism is not socialism. The greatest threat to capitalism is the capitalist. Find me the businessman who is truly in favour of free markets in his own particular line of business. I say no such creature exists.

They all want their markets rigged in their favour. They will deny it, of course, and insist they only want orderly markets or the opportunity for their industry to fulfil its potential. Boil it all down and it's clear they want either the government to grant them preferential rights or to raid the public treasury directly.

It is my guess that executives at the senior levels of most reasonably big corporations spend two-thirds of their time dealing with government for every advantage they can get. It cannot be much less than that.

I have no objection. These executives have a fiduciary duty to their shareholders' interests. I expect it of them for any stock I own. Push up my share price, fellas. Three cheers for you.

That's what I say as a shareholder. As a public-spirited citizen I say that capitalism needs to be protected from capitalists and it is best done when government keeps them at arm's length. Free markets work most efficiently when government closes its doors to corporate beggars.

But, of course, this cannot happen if government brings these corporate beggars right into the very centre of decision making by granting them functional constituencies in the Legislative Council.

I accept that the motives for doing it were laudable. It seemed to make sense years ago that government should endow itself with real expertise in major industrial and professional fields by giving their representatives seats in Legco.

But this reasoning ignores that government always had access to this expertise anyway. It did not gain more of it with functional constituencies. All it did was create special interest voting blocs that support each other's raids on the public purse.

The result has been openly declared vote trading that is satisfied only with the award of hugely expensive contracts for public works of dubious value. The corporate beggars get what they want because they maintain the administration's majority in Legco.

And that is where we need to decipher Wang's comments on the matter. Ordinarily I wouldn't pay much heed to a Beijing law professor's thoughts on the operation of markets. I expect no real understanding there. I also doubt he is in any way concerned with protecting capitalism or meritocracy in Hong Kong. What he was doing was advancing a straightforward political cause. Functional constituencies support the Beijing-appointed administration against democratic legislators. Therefore functional constituencies are good.

All that remains is to dress up support for them in language that expresses concern for the prosperity of Hong Kong rather than letting it be seen as a bold political statement advocating Beijing's ultimate authority.

Once again, I have no real objection. I fully defend Wang's right to speak for Beijing's authority on any platform he cares to occupy.

I only wish he would declare his stance for what it is instead of pretending he wants to protect capitalism when what he advocates will have the opposite effect. Capitalism already has a bad enough name. Praising it while destroying it won't help.

But we can expect ever more such talk as the 2016 Legco elections come closer and all the proposed reforms for these elections are discussed with ever greater heat. Talk away, folks, but let's talk straight. Functional constituencies may bolster central government authority, and this may be a laudable objective, but they are wasteful of public funds and undermine our economy.

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