The economy grows, but we’re still going to be stuck with expensive housing and bad traffic
Growth hasn’t improved our sense of well-being, and there doesn’t seem to be much the government can do about it
Fifteen years of economic growth in Hong Kong have failed to improve people’s well-being, according to a study by one of the city’s leading think tanks... Housing and transport were the two greatest factors affecting people’s quality of life.
SCMP, October 19
I have two immediate quibbles with this Bauhinia Well-being Index (BWI)from the Bauhinia Foundation, aside from the fact that I think greater well-being is still conferred by the Caribbean equivalent, BVI.
The first quibble is that everyone is doing social survey studies these days. It’s the cheap avenue to publicity. But such surveys rarely produce findings that conflict with the political viewpoints of their sponsors. In fact they never do.
There are no standard measures of well-being. The people who do these things just make up their own toolboxes and then try to convince others that they have the best tools available. I’m sure that this BWI study is a legitimate effort but there are thousands of its kind and they don’t all agree.
My second quibble is the common misperception that the Hong Kong economy is so governed by obsession with property that other activities are crowded out.
In economic terms this obsession does not exist. Gross domestic product takes account only of construction activity, including infrastructure, and of costs of ownership transfer. As the first chart shows, these costs amount at present to just over 12 per cent GDP and they have historically been much higher.
I don’t call this an obsession. Equally I don’t think the economy is too heavily focused on financial services to the detriment of other activities. We make our money from financial services. We then have it available for other activities. Long may this virtuous feature of the economy continue.
But I think the Bauhinia Foundation is right in saying that a steady growth in GDP per capita has not been matched by people’s own experience of their living circumstances, and that housing costs and conditions plus increasing transport snarl-ups are prominent among the reasons why.
My view is that there is nothing that our government can do at any time soon to alleviate the housing problem other than break the peg to the US dollar, which would probably cause worse difficulties.
Housing prices are at ridiculously high levels because mortgage interest rates are at ridiculously low levels, thanks to the irresponsible monetary policies of the US Federal Reserve Board in recent years. This phenomenon lies at the core of the common complaint about housing shortages and we are just stuck with it.
Nor do I think there is much that our government is likely to do about the increasing traffic jams from which we suffer. As the second chart shows, the growth in number of cars on the road over the last 10 years has hugely exceeded the growth in roadways available to them.