Political economy is not a core curriculum subject for most Hong Kong social science students. Legislator Christine Loh did us all a favour yesterday, injecting a dose into the debate over land supply and housing shortages.
For too long the Government has duped the world into believing it is a low tax, free market paragon.
In fact, it charges massive indirect taxes through the limited land supply-high prices equation. The $196 billion fiscal reserves and $183 billion land fund are evidence of this.
This money has been appropriated from tax payers over the years because the Government holds the monopoly over land. By limiting private sector land sales, property prices are kept sky high and government revenues are secured.
Property developers have become the world's richest as a result and banks have funded global conquest from the vast lending margins charged on home mortgages. The Government keeps the pretence going because practically no other economy is taxed in the same manner.
In 1995-96 the Government raised more than $62 billion from land transactions, representing 32 per cent of revenue. Recent record auction results suggest even higher numbers this year.
Oddly, the territory rejoices at the ballooning of its fiscal reserves with the stupidity of a bullied child. More precisely, the property-owning, well-to-do middle classes cheer because they are the main beneficiaries. Full employment and a booming property market is, after all, the stuff of bourgeois heaven.