(This essay was published in South China Morning Post on 31 December 2014.)

 

The day before Christmas I spent an afternoon walking around Central. It was busier than ever.

Fast paced, opulent and cosmopolitan, Central exudes Hong Kong’s vibrancy. I don’t live or work there, but since childhood I have felt its heartbeat powering my city. Central is not just a photo on postcards, it is the soul of one of the world’s proudest international economic cities.

I have been told many people today, including young people, no longer feel this way about Hong Kong. They don’t know Central and hardly ever go there.

Many children, perhaps as many as half, grow up in New Territories’ housing estates and do not come into Central until past their teens. They see it as a costly luxury and more importantly, see no obvious reason to make the trip. Central is far too remote from their lives.

In the past 30 years, Hong Kong’s economy has prospered, but growing numbers in the low- and middle-income classes have been left behind. Income inequality has risen in all the rich nations, but Hong Kong’s situation is particularly severe.

Under-provision of education opportunities means the income gap has failed to narrow as economic and technological advances increasingly reward those with more human capital.

Even more devastating is the impact from rising property prices. Society is now divided into “haves” and “have-nots” based on property ownership (half of households are without property). This has lasting negative consequences for long-term economic and intergenerational inequality.

The sense of alienation that a growing proportion of Hong Kong people feel towards Central is reinforced by the rising number of Mainland visitors, whose purchasing power has bid up retail rents in many parts of the city and dictates what shops sell. The value-added reaped by landlords is not trickling down, which further worsens the income gap and asset ownership divide.

It puzzles me why more shopping malls and outlet stores haven’t opened in new town areas to provide relief for congested areas. People in the know tell me land is so scarce and the political cost of getting every stakeholder to agree to such projects so formidable, that no government official dares to propose them.

A similar puzzle is why the many industrial buildings in older areas haven’t been allowed to be converted into other uses. This is all the more odd because most of our industries left two decades ago.

Related to that is the most puzzling case of Old Flatted Factory Estates operated by the Housing Authority. Why is Hong Kong still subsidizing sunset operations from yesteryear, especially when many now only use the space for storage? There are about 325,000 square meters of such floor space.

The supply of residential space, as both shelter and savings vehicle for the middle and low-income classes, is another great puzzle.

Living conditions have become increasingly cramped in Hong Kong. Yet there is much land that cannot be developed because of political resistance from narrow special interest groups. Less than 25 percent of Hong Kong’s land has been developed.

These cases bring to mind the argument in favor of a diversity of minorities, which are considered the foundation of a pluralistic society. Alexis de Tocqueville made this observation in his Democracy in America.

But this view has increasingly been eclipsed by developments in the West, where minorities have gained political power at the expense of majorities.

Democracy is intended to be all-inclusive, but it is increasingly being hijacked by minorities – robber barons, conservationists, cyclists, unionists, environmentalists, chicken farmers, and what not. This is not healthy for an inclusive system.

As I walked around Central just before Christmas, I noticed different kinds of shoppers. Some were keen and some, like myself, not so keen. Yet we all took up approximately equal street space. I was wasting street space without paying sufficiently for it by spending more. An economist would say: I have produced an externality for others by being in Central.

Democracy is analogous: everyone has an equal vote, but different voters feel differently about issues. Their views also differ in intensity. We saw this in attitudes toward the Occupy Movement. When votes are counted, “one person one vote” does not accommodate the difference in intensity a person feels for an issue.

If we can fix the Christmas shopping problem, we may perhaps be able to also fix the difficulties of democratic voting.

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