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The Praise of Entrepreneurship and The Myth of Hong Kong's Laissez-faire

As I wrote in a post a week ago, Hong Kong is currently experiencing a social and political reform movement aimed at introducing universal suffrage. Hong Kong has never held fully democratic elections, neither under British rule nor as a special administrative region of the People's Republic of China. I find the desire of the people to play a more active role in their community's decision-making process absolutely legitimate. However, not everyone agrees. For instance, in today's edition of the South China Morning Post, Alex Lo, one of the leading columnists of the newspaper, has criticized those who take on the streets to ask for democratic reforms. 

"Young men and women, take real risks," he urged the pro-democratic camp, "Travel the world, read widely, strike out on your own, start a business [...]. Then come back and fight for democracy."

Mr Lo's article is one of those spectacular examples of what I would call  a neoliberal oligarchic ideology, a pro-business, pro-free-market dogmatism our political and intellectual elites seem to be imbued with. 

The main point of Lo's argument is that the people who ask for more democracy are people who "rely too much on the government and expect it to fix every problem", be it "[p]arallel traders blocking MTR traffic", economic slow-downs, expensive flats, milk powder shortage (South China Morning Post 04/08/2013, p. A2). 

This attitude is what he describes as "the sense of entitlement and instant gratification of the iPhone-pan-democrat generation" (ibid.). 

So what is the alternative to this rotten and spoiled generation? According to Mr Lo, it is "native entrepreneurship", the force which "made Hong Kong great". The class of "risk-takers" who created wealth and employment. Mr Lo partly attributes the strength of Hong Kong's entrepreneurship to the incompetence of the British, who did not respond to popular demand so that no one expected anything of them and everybody had to take care of themselves. 

Lo further describes the entrepreneur as the freest person, because he controls his own destiny. Lo therefore urges the people of Hong Kong not to demand too much democratization, but to become more entrepreneurial, because this is what made Hong Kong a success story, while a disappearance of the entrepreneurial drive would mean a decline of the city. 

The laissez-faire myth propagated in Hong Kong and in the Western world, however, simplistically obscures the interaction between state and economy, and it neglects the specific circumstances under which Hong Kong rose economically. 

The reality is that the government was an important factor in the local economy. In the years of the economic boom (around 1960-1990) the government was "the largest employer, the biggest developer of real estate, the leading constructor, the largest landlord and the biggest provider of education and health services" (Tsang 2011, p. 171). Although the economy had been rising after WWII, the real take-off in the 1960s, 1970s and 1980s coincided with an expansion in government services which did not undermine the phenomenal GDP growth.

Under financial secretary John Cowperthwaife (in office from 1961 to 1971) the colonial government invested heavily in public works, education, medical services and public housing projects. Furthermore, "real wages rose by 50 percent, and the percentage of impoverished families dropped from around 50 percent to around 15 percent" (Carroll 2007, p. 160).

During the years of the economic boom the population grew from 2 million in 1950 to 5 million in 1980. By 1990 it had reached almost 6 million (Tsang 2011, p. 172). The growth of the industrial capacity, the increase in productivity, wages and public expenditure, the introduction of work regulations and the expansion of the population also helped create a domestic market. 

It is true that, compared to European and other East Asian countries, Hong Kong's administration was small and did not direct the economy in a Japanese-style way. It is also true that the economic boom was a result of the activities of the private sector. But it would be a mistake to ignore the positive impulse given by the government, as well as a tacit understanding that economic development had to generate a rise in the standard of living of the working class at large.

Besides, one cannot ignore the particular geopolitical and historic situation of Hong Kong, whose port and financial sector were created from scratch by imperial Britain and whose main source of revenue in the first decades depended on opium trade. On these premises, before WWII Hong Kong had already established itself as one of Asia's biggest economic centres. 

After the war in 1945 and the Communist victory in mainland China in 1949, millions of migrants went to Hong Kong, a large number of whom were industrialists from Shanghai and other major Chinese cities. They brought with them capital and expertise and continued their business in the British enclave. From 1949 to Deng Xiaoping's reform era in the mid-1970s, Hong Kong thus remained the only Chinese industrial and financial centre as well as major port. Hong Kong’s pre-existing networks of trade, banks and finance, along with the networks that the British empire and the English-speaking world at large offered it, benefited those industrialists who settled in Hong Kong. The Chinese population could take advantage of the financial resources and networks of British banks and of Hong Kong's port, which served the whole region (Tsang 2011, pp. 166-167). 

The real estate market was also a major source of profits. In fact, "most of Hong Kong’s top business conglomerates of the 1990s were built on the basis of bold investments in real estate development in this period", including business tycoon Li Ka-shing's (ibid., p. 173). 

Li Ka-shing is, in this respect, a figure that symbolizes the shift from the "virtuous circle" of the boom years to the "vicious circle" of the present. 

On March 28th 2013 a strike by subcontracted workers at Hongkong International Terminals, which belong to Li Ka-shing's Hutchison Port Holdings Trust, began. They demanded around 20% wage increases. At present, they earn 7 US dollars per hour. A senior worker stated:  “The hours are long, and the work can be dangerous at times. Counting inflation, I am making less than I did 10 years ago” (note).

Against this backdrop, it is grotesque that Mr Lo demands more entrepreneurial spirit, as though the problems that dockworkers and other categories of hard-working people in Hong Kong did not exist. Or do they, too, belong to a spoiled "iPhone" generation? 

Businessmen like Li Ka-shing have been successful in making people believe that "what is good for the tycoons is good for Hong Kong." In this way, by portraying themselves as an elite that everyone should thank for their achievements, and by implicitly saying that they are better than those who had not the talent to become big entrepreneurs, they have influenced politics so that the middle class had to suffer most. Let's remember that in the boom years people saw real wage increases up to 50%; while today, when you demand wage increases, you are blamed for not sacrificing yourself for the good of the country. At the same time, people like Li Ka-shing amass enormous wealth and make people believe that this is good for everyone. This is an extremely smart, subtle strategy.

Instead of analyzing the deep causes of inequality and dissatisfaction in the society - this is Mr Lo's suggestion - we should blame those people who ask for more democracy, because they symbolize a decline of the entrepreneurial spirit. We should blame them for not being entrepreneurs and not being tough and hard-working enough, for fighting in the name of abstract ideals. We should perhaps also blame the workers that see their wages decrease year by year for striking and undermining the profits of the companies they work for. So let us create a nice oligarchy of business people and politicians. We shall keep quiet and let them make the decisions for us; because, after all, they are better than us common people, aren't they?

The increasing 'oligarchism' visible in the last decades was echoed today by Hong Kong's ex justice secretary Elsie Oi-sie, a Beijing loyalist, who, in response to a statement by Qiao Xiaoyang (喬曉陽), chairman of the Law Committee under the National People's Congress (read my post about the struggle for universal suffrage in Hong Kong) urged Hong Kongers not to vote for someone who confronts the Beijing government in case universal suffrage should be implemented. "If we are stupid enough to do so," she said "we shall not blame the central government for the consequences" (South China Morning Post 08/04/2013, p. A1). 



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