(This essay was published in South China Morning Post on 14 September 2016.)


Across Western democracies, from the America of Donald Trump to the France of Marine Le Pen, large numbers of people are enraged. They believe globalization, migration, and free market economics are not working in their interest.


Globalization since 1980 has brought prosperity to the majority of the world’s population, but also left many behind. A single diagram tells it all. Dubbed “the kneeling elephant,” the horizontal axis measures the percentiles of the global income distribution, while the vertical axis shows the cumulative growth in income from 1988 to 2008.



Populations in the 35th to 70th percentiles (mostly in emerging countries like China) and the 99th percentile (the world’s highly-skilled elites, many in the US) have achieved cumulative growth rates in excess of 60%. But those in the 80th to 90th percentiles (mainly lower middle classes in rich nations like the US) have lost out.


Supporters of globalization, including myself, have often failed to appreciate that while the economic consequences of globalization have been swift, the responses of governments and civil societies to alleviate the economic and social dislocations have been incredibly slow.


Globalization has also left a particularly big mark on Hong Kong, with many winners and plenty of losers. Hong Kong was the first place to experience the tidal waves of globalization due to China’s opening in late 1979 but median household income has largely stagnated over the past two decades.


In the midst of this massive economic change was the political transition triggered by the restoration of sovereignty in 1997. The Basic Law states that “the previous capitalist system” shall remain unchanged for 50 years.


The majority establishment block that still exists in the legislature today was surely a deliberate political design to ensure this. There was an understanding that democratic elections would expand and provide a path to avoid a freeze in the political system, but only modest progress has been made for several reasons.


First, the democratic opposition has exploited fear of Beijing that began with the Tiananmen Incident.


Second, the democratic opposition has strengthened in the wake of the rising economic divide. Left-leaning social and labor policies have gained ascendancy as the real incomes of the middle and lower middle classes have stagnated.


Third, the entry of Beijing into the domestic conflict has led to total political gridlock. While the establishment was slow to appreciate the deepening plight of the economically disadvantaged, Beijing’s displeasure at the constant attacks by the democratic opposition drove it to join forces with the establishment as a single force locking horns with the democratic opposition. Domestic conflict over social and economic policies escalated into political animosity between Hong Kong and the Mainland, and many problems remain unresolved.


Fourth, public dissatisfaction is escalating into radicalism and utopianism. Under the Basic Law, the democratic opposition has the right to veto bills, but without any need to act responsibly to deliver on campaign promises. This has led to voter dissatisfaction and splintering in the opposition camp, which has then led to further political fragmentation and radicalization. Many voters still elect opposition politicians to office because they fear Beijing will take away their liberties.


Hong Kong is in the grip of two emotive forces: the politics of anger over the rising economic divide, and the politics of fear over whether Beijing will end the previous way of life. The fear gets in the way of finding a solution for the anger. Political paralysis results!


The failure to assuage the growing economic divide has driven more people towards a leftist solution which, if implemented, would obviate any need for preserving one-country two-systems. A socialist democracy would be a disaster and liberty will not survive.


The recent Legislative Council elections have maintained political gridlock, despite the new faces. Many of them have courage, conviction, and commitment, but are they prepared to lead Hong Kong out of its dark hour? Or will they copy their predecessors in dishing out vetoes, with their eyes glued to the rearview mirror? Another unknown is whether the government will also exercise leadership in this situation.

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