(This essay was published in Hong Kong Economic Journal on 10 June 2015.)


The harassment of the 12-year-old boy who illegally overstayed his visit for 9 years and was hounded out of Hong Kong by radical nativist protestors, was the kind of shocking event any civilized society respecting the rule of law and basic human rights would outlaw. Radical nativism is an embarrassment to advocates and supporters of the democratic cause. Their extremism should not be condoned.


Democracy has been held up as a superior political system precisely because historically in the 18th and 19th centuries it was a reliable institutional means for upholding the rule of law and protecting human rights (including private property rights) in Western Europe and North America. There is much persuasive evidence on how an inclusive political system can trigger and sustain economic modernization. But if, and only if, it succeeds in upholding the rule of law and protecting human rights.


There have been numerous well-known cases when democracies have failed to do so. This has occurred when organized minorities successfully captured the power in a democratic state and turned it into a less- or non-inclusive political system. Daron Acemoglu and James Robinson have called this “the iron law of oligarchy” in their book entitled Why Nations Fail.


Their study, however, gives too much weight to the detrimental effects of oligarchies in business and the military and fails to recognize the equally damaging effects of oligarchies that have appeared in contemporary democracies. These oligarchies are made up of organized grassroots and labor interests, whose favorite redistributional and regulatory policies hijack public interests to serve private goals.


Hong Kong is one of those exceptional historical examples, where as a result of a confluence of historical circumstances, the rule of law and basic human rights became well protected even without the establishment of a democracy. British colonial rule was tolerated by a largely immigrant population whose fear of the rule from Beijing after the communist revolution was even greater.


One country two systems was a critical institutional arrangement crafted to preserve public confidence after the departure of the British colonial administration and the restoration of Chinese rule. Its ultimate goal has been to create in Hong Kong an elected chief executive and legislature through universal suffrage.


For Hong Kong, democracy has been first and foremost merely a means to an end. Its only meaningful purpose is to foster public confidence under Beijing’s rule. Unlike Western Europe and North America, democracy is not needed to bring about the rule of law and respect for human rights. These have been already in place here.


If done well, democracy can achieve the audacious purpose of winning over the hearts and minds of the Hong Kong people. The Beijing authorities have from time to time pointed out it is them, and not the British, who have promised democracy for the people of Hong Kong.


The events and developments of the last quarter century have shown that this is not an easy task to achieve. Indeed, in the process of finding the way, our younger generation has increasingly pursued democracy as an end in itself, as a universal system of values desired for its own sake. How did this come about?


First, the events of June Fourth and the attempted enactment of Article 23 both undermined confidence in Hong Kong. The Democratic Party and the Civic Party were very much products of these events.


Second, runaway property price inflation in Hong Kong has created a huge divide between the haves and the have-nots. As growing numbers of the middle class began to sink, political radicalism grew. Democracy in Hong Kong now has two purposes. For the moderates, it remains a means to allay public fears of the rule of Beijing. For the radicals, it has become a political goal to create a just society. As society has become more unequal, democracy has increasingly been perceived as an end in itself, to create a better future out of the corrupt present, rather than as a means to defend what is good in society.


Runaway property price inflation is of course not a unique phenomenon to Hong Kong. It is a growing problem in all major cities in the world. The more successful they are as economic centers in the global economy; the worse is their property price inflation. It is a problem that afflicts both politically democratic and undemocratic cities. Runaway property prices are the consequences of rapidly escalating excess demand. The shortage in supply, both in Hong Kong and elsewhere, are primarily the product of restrictive regulations on development and the delays caused by divisive politics.


The rise of radical politics has fuelled the fears of the establishment coalition, many of whom have been in place since the British days, that the members of Hong Kong’s democratic opposition are, like populist politicians in other western democracies, enthusiasts for redistributive politics and big debt-ridden governments.


Many in the establishment coalition harbor concerns that a democratically elected government will harm the prevailing system of a limited government, low taxes, and free markets. These achievements, accompanied by the rule of law in Hong Kong, have protected property rights, preserved economic freedom, and provided equal opportunities of all. They are responsible for Hong Kong’s postwar economic success and well worth defending. Even the large measure of civic freedoms enjoyed by the people today cannot be separated from these institutional and policy arrangements. Democracy, however, is a separate matter.


Beijing, as we know, has also long been uneasy about the democratic opposition. It has become incensed at their increasingly enthusiastic attempts to capitalize on political tragedies on the Mainland and the failures of the Hong Kong government to reap gains at the local ballot box. This has led Beijing to thwart the development of the opposition. The proportional representation rule was introduced in 1999 to replace the simple plurality rule in a bid to limit the dominance of the opposition in the legislature.


The simple plurality rule had given an exaggerated advantage to the opposition, which was able to capture 18 out of 20 directly elected seats in the 1995 Legislative Council elections, even though the pro-establishment DAB Party obtained one-quarter of the popular vote.


A hastily designed proportional representation rule, however, became the catalyst for the emergence of radical minority interests as an organized political voice in the legislature. The growth of this political force was no doubt exacerbated by the increasing wealth disparity in Hong Kong due to rising property prices.


The rise of radicalism in the legislature triggered two developments: more intensive animosity towards Beijing and the growing rift within the pan-democratic camp.


The 2010 by-election, dubbed the Five Constituencies Referendum, signaled the first serious split within the pan-democratic camp when the Democratic Party boycotted the exercise. The split was further widened and deepened by the subsequent drive by radical groups to rout the Democratic Party in the 2012 Legislative Council elections, after the latter entered into a dialogue with Beijing that led to important breakthroughs in political reforms. Members of the Democratic Party to this day are bitter about this experience and maintain that the radicals are being funded by suspicious sources.


The growing division and fragmentation of the political landscape has evolved into a non-cooperation movement within the Legislative Council that has escalated without bounds. Even policies attempting to address the growing inequalities in society are not exempted from filibuster actions. As the economic and social contradictions in Hong Kong society fail to be addressed, both the establishment coalition and Beijing have been increasingly vilified in the eyes of the public.


The radicals have successfully precipitated the initial fear of Beijing into animosity towards Beijing. Harassment has become an instrument of hooligans to harness populist support and terrorize the innocent. Politics have made a lunge towards the irrational and the absurd.


The promise of democracy in the Basic Law was intended to reassure a Hong Kong public whose confidence in the rule of Beijing was weak. The political arrangements inherited from the British and their subsequent reforms have been unsuccessful in addressing the growing economic and social contradictions in Hong Kong society, especially the rising disparity of wealth due to property price inflation.


The appearance of an organized, radical political voice has poisoned any rational discourse leading to effective policy solutions for Hong Kong’s economic and social ailments. Every problem has been transformed into a zero-sum political confrontation between Beijing and Hong Kong, between the establishment and the pan-democrats, and between the moderates and the radicals. Further polarization and multi-sided confrontation will not lead to a resolution of either Hong Kong’s economic and social contradictions or her political development.


It is a mistake to believe that social and economic problems can be reduced solely to political ones. The theatrics and tactics employed by the radicals reflect the mistaken belief that political confrontation can solve all problems. It only succeeds in sowing deeper mistrust between Beijing and Hong Kong and makes it more difficult to achieve progress on all issues. To make “one-country two-systems” work, Hong Kong and Beijing must cross the bridge together holding hands. A high degree of trust is necessary.


Both Beijing and Hong Kong must appreciate the enormous importance of having a healthy opposition if our city is to thrive economically and socially. A free society based on the rule of law is important for an advanced economy to function properly. The best assurance of an opposition that does not stand in the way of progress is to have the legislature elected by universal suffrage. But Hong Kong also needs a democratically elected Chief Executive by universal suffrage to maintain public confidence in the Basic Law.


Trust needs to be rebuilt urgently.

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