Wednesday, January 10, 2018

Society: two interesting articles

Colm Kelly and Blair Sheppard give a short historical recap leading to the current situation we're in today where there's resentment and increasing gaps between rich and poor. Then, they propose a few avenues for resolution:

https://www.strategy-business.com/feature/Common-Purpose-Realigning-Business-Economies-and-Society?gko=e57f6

In the following article, Sally Helgesen explains Cass Sunstein’s theories on how better societal and individual outcomes can be attained by "nudging" people to make better choices. All of this while keeping an individual's freedom to choose:

https://www.strategy-business.com/article/Its-All-Cass-Sunsteins-Default?gko=ab34c

Tuesday, December 19, 2017

letters@scmp.com : Enacting Article 23

from:Jean-Christophe Clement 
to:Letters ,
Mike Rowse
date:20 December 2017 at 06:41
subject:Enacting Article 23

I refer to Mike Rowse’s opinion piece published on Sunday, December 17th, 2017, where he proposes that the best chance for Hong Kong to get a favourable outcome on Article 23 is for us to draft it and set the terms… before Bejing does.
I believe he is entirely correct.
Here is the mandate: “The Hong Kong Special Administrative Region shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government, or theft of state secrets, to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies.”

The treason, secession, subversion bits need to be toned-down so they will not be abused by Beijing. Similarly, the “ties for foreign political organizations or bodies” is too broad and therefore could encroach on freedom of movement and speech. Here’s my suggestion as to the spirit of what it could look like:

“Any act of treason, secession, or subversion against the Central People's Government through violent means or explicit incitement to use violent means, or theft of state secrets, are prohibited. Foreign political organizations or bodies are prohibited from conducting political activities in the Region. Political organizations or bodies of the Region are prohibited to establish formal ties with foreign political organizations or bodies.”

I would say it would be hard for anyone to argue for violence and formal ties. Yet if Beijing refused such a formulation, it would make their real intentions plain for all to see…

JC Clement


-----------------
About sedition laws in general, I'll let you ponder on the following:
"What is democracy if not a plot to change the power in place?"

Friday, December 15, 2017

The silent enabler

I always wonder what is the rationale Hong Kong residents have when they are faced with the evidence that China is progressively chipping away at Hong Kong’s way of life (freedom of expression, rule-of-law, separation of powers, etc. All the good stuff in a free society).

One of the pundits, Michael Chugani, has made his position clear in his SCMP comment on the suggestion that tickets for the Express rail might be payable in RMB:

"Are you serious, Mr Secretary? Do you really want to pursue the folly of using China’s renminbi as the currency to buy express rail tickets in Hong Kong? Unthinkable as it may be for many Hongkongers, that’s exactly what Transport and Housing Secretary Frank Chan Fan said two weeks ago.
These were his exact words at a press conference about the railway’s logistics: “How about the kind of currency that we are [to be] using? Should it be the Hong Kong dollar or should it be renminbi?”
I can think of only two reasons for Chan’s astounding remark: he wasn’t thinking straight, or he is unfamiliar with the word “mainlandisation”.
Either way, it again proves that our officials have an inborn knack to shoot themselves in the foot.
Mainlandisation is anathema to many Hong Kong people. But it’s an inevitability that’s already eating away at the feel and culture of our city. Mainland developers have humbled local property tycoons in snapping up land. Mandarin has become a fixture in our finance sector. Even Hong Kong icon Cathay Pacific has lost its blue-chip status to a mainland firm on the Hang Seng Index.
Do we want to hasten the process by requiring Hongkongers to pay in renminbi for express rail tickets at West Kowloon?
The HK$84 billion Guangzhou-Shenzhen-Hong Kong Express Rail was built with Hong Kong dollars and paid for by local taxpayers. Its terminus is in West Kowloon, which will remain part of Hong Kong even after a section is placed under mainland jurisdiction.
Call me a localist if you will, but I am ruffled by the thought of having to pay in renminbi for a ticket on a railway built and paid for by Hong Kong.”

Sure, but these are details. The important part and the character of Hong Kong is not the fact that it is using the Hong Kong dollar to pay for a train ticket.

“Don’t confuse my brand of localism with that of the lunatics who equate it with self-rule. Independence is never going to happen, but drilling that into the brains of such people is mission impossible.

My definition of localism is accepting Hong Kong as a part of China but keeping at bay the kind of mainlandisation that dilutes our city’s character and culture. Many local stores, particularly high-end ones that cater to mainland tourists, already accept payment in renminbi.
But the express rail is not a store. It is a taxpayer-financed government entity intended to showcase Hong Kong as an international city efficiently linked to the world’s second-largest economy.”

Oh, so, now it is quite clear; for Chugani, mainlandisation is the irrelevant details. The big things that made Hong Kong what it is, he does not seem to understand or care for. What is now Hong Kong was the land nobody wanted before the Brits took it over, and then enshrined the principles of free enterprise, rule-of-law, freedom-of-the-press, freedom-of-expression, an independent judiciary, no communism… That is what makes Hong Kong what it is.
I am not saying that colonialism is preferable, that's not my point at all. But for sure, everything that a CCP-ruled China will be bringing is the antithesis of the Hong Kong character.

“But joint immigration at West Kowloon does scare many Hongkongers who fear being arrested by mainland officials on Hong Kong soil.
Opposition legislators have fanned this fear, insisting that joint immigration violates the Basic Law. They have used, and intend to continue using, every trick in the Legislative Council rule book to stall local legislation that will allow joint immigration.
Some in the opposition have even ridiculed the express rail link as a pricey showpiece that benefits business elites rather than ordinary Hongkongers.
Does Chan really want to throw them more red meat by considering renminbi as the fare currency? Such a move will play right into the hands of the opposition. What next, they will ask. Charging renminbi for plane tickets to the mainland? What happened to “one country, two systems”?
It is, of course, a given that passengers travelling from the mainland to West Kowloon should pay with renminbi. I don’t even mind if passengers to the mainland are given a choice of either currency.
But choosing renminbi as the only currency? No sir, Secretary Chan. Banish the thought here and now.”

See, that’s the crux of the problem with people such as Chugani. Either because of ignorance or naivety, he believes that his idea of the Hong Kong character will survive within China even if the core of Hong Kong political, economic, and legal system goes. It cannot, because it is the Hong Kong character! Let’s see how content Chugani is when the only thing left of Hong Kong is Cantonese opera and pineapple buns. 

As such, he is silent enabler; thinking that if we go quiet, the Chinese government is going to keep the status-quo. Unfortunately, the evidence of the past few years  support the exact opposite. And no, they are not all related to the Occupy movement (abducted booksellers rings any bells?)

I think that quite the opposite; China will accelerate the complete removal of the Hong Kong character unless the silent-enablers wake up and voice their dissent.

P.S. On a side-note, the SCMP has taken to refer to Hong Kong as a 'City' instead of a 'S.A.R.' lately…



Thursday, December 14, 2017

The actual poverty situation in Hong Kong; not nearly as bad as some make it sound

One has surely read the line in a paper recently to the effect that “Poverty in Hong Kong hits record high” or that “one million people live in poverty, about 1 in 5”.

The press merely copy and pasted the headlines from the Hong Kong’s Commission on Poverty’s recently released report on poverty in Hong Kong.
https://www.povertyrelief.gov.hk/eng/pdf/Hong_Kong_Poverty_Situation_Report_2016(2017.11.17).pdf

Can this really be the case? It is, but only if you consider the Hong Kong government’s definition of poverty as being the state of someone who’s salary is below half of Hong Kong’s median income. That definition does not include investment income of any sorts (except for taxable one such as rental income).

I do believe that a definition of poverty relative to median income is sensible when compared to absolute-need poverty that was more suited for the middle-age.

But the calculation of income should be accounting for all sources of income, or risk being abused, and used to derive bad policies. I think that most would agree that if Li Ka Shing retires and stops receiving a salary from his various businesses, he should not be counted in the Hong Kong “poor”, which, by the current calculation, he would be.

I think it would have been critical for the press to highlight this fact as people have an assumption of what poverty is, and it certainly does not include millionaire retirees and well-to-do see-lais. Another perverse side-effect is that, unless the current calculation is amended to reflect income from all-sources, we would logically see a year-on-year increase in “poverty” as an increasing percentage of the population are retiring, and, by the current definition, automatically becoming “poor”.

I had a feeling that something was afoot as the number of “poor” people just seem so high that it seemed to indicate something fishy in the calculation. Then, I figured that unless the way of coming up with these figures was based on population surveys, only the salary-based income could be included in these as all investment-related gains are not taxable, and therefore not declared here in Hong Kong.

To make sure, I did contact the Hong Kong’s Commission on Poverty, which confirmed that any income derived from investment were not calculated in the Hong Kong definition of poverty as they base their calculations on data from the Internal Revenue Department (ie. your income tax declarations)

Let’s have a look at the document and try to make some reasonable assumptions to establish a more accurate Hong Kong poverty level.

“ES.16 It must be pointed out that adopting household income as the sole indicator for measuring poverty may overstate the poverty situation since some “asset rich, income-poor” persons may be classified as poor. In fact, among the poor population after recurrent cash intervention in 2016, 84.6% (842 900 persons) resided in non-CSSA households, among whom 539 800 persons (64.0%) had no financial needs, which were up by 27 500 persons and 0.3 percentage point when compared with the corresponding figures in 2015 (512 300 persons and 63.7%). Among some 0.34 million poor elders, 87.6% (295 400 persons) resided in non-CSSA households and over 70% of Hong Kong Poverty Situation Report 2016 Executive Summary xii them (211 100 persons) had no financial needs to apply for CSSA. In addition, over 60% of the poor elderly households resided in owner-occupied housing without mortgages, representing the highest share in eight years. This reflects that many poor elders do have considerable assets.”

There you have it; 84.6% of the “defined-as-poor” population actually live within a non-poor household. That’s basically my wife, who’s technically “poor” but actually has quite a nice lifestyle, traveling abroad on a near monthly basis. This is further confirmed by the 64% of that population having ‘no financial needs’. Let’s be conservative and assume that there’s 10% of these that are fringe cases that do need assistance for whatever specific situation, but just happen to fall through the cracks of the system. That would still mean that out of the strictly-by-current-definition 1 million-or-so “poor”, only about a quarter should actually be considered poor (about 240,000).That is a more accurate 3.2%, all-income-sources, median-relative Hong Kong poverty rate.

“ES.20 In 2016, the poverty rates of unemployed, economically inactive and elderly households after recurrent cash intervention were the highest (69.8%, 59.2% and 48.8% respectively) among all socio-economic groups. The corresponding poverty rate of working households was relatively low (8.0%), demonstrating that employment is the best way to prevent poverty.
(…)
ES.25 Indeed, for groups that lacked recurrent employment earnings (including elderly persons aged 65 and above, elderly households, households with elderly head and economically inactive households), their poverty rates were persistently high. Conceivably, as members in these groups have mostly retired, their poverty rates, which are defined by income, tend to be relatively high and bear no significant direct relationship with economic cycles.”

This indirectly restates the problem with the calculation; if you don’t have salary income, you are almost guaranteed to be poor as per current definition. That is after the poverty-alleviating measures.

“ES.36 On the other hand, since the poverty line analysis under the core analytical framework does not take assets into account, some “asset-rich, income-poor” elders are classified as poor elders. Among some 0.34 million poor elders, 87.6% resided in non-CSSA households, and around 0.21 million of these poor elders had no financial needs. Over 60% of the poor elderly households resided in owner-occupied housing without mortgages, representing the highest share in eight years. This also reflects that many poor elders do have some assets. In this connection, the Hong Kong Mortgage Corporation Limited announced in April 2017 a life annuity scheme to help the elderly turn cash lump sums into life-long streams of fixed monthly income. Scheduled for launching in mid-2018, the annuity Hong Kong Poverty Situation Report 2016 Executive Summary xvii scheme would provide those elders with some assets an additional financial planning option to manage their longevity risk by turning their assets into regular income streams.”

Again here, hardly the definition the average would make of living in poverty. Also seems that the annuity scheme is a good option to offer, regardless of poverty level.

“1.V.1.15.(i) Poverty situation by age of household head: the existing poverty line only takes income into account while most elders do not have employment income. This may result in overestimating the elderly poverty counts. It is anticipated that this problem will be aggravated by more acute population ageing down the road.”

This is the concern that I stated above; if the poverty line calculation does not account for other sources of income, then the ageing population will skew the stats.

Additionally, it seems that the aim of CSSA is not aligned with the definition of poverty, which makes the popular interpretation of ‘poverty’ unduly confusing: while the poverty line is relative to median (and therefore not basic needs), the CSSA’s designed is for basic needs:
“The Comprehensive Social Security Assistance (CSSA) Scheme is designed to provide financial assistance to individuals and families in need so as to bring their income up to a prescribed level to meet their basic needs.”
http://www.1823.gov.hk/eng/FAQ/019001/index.shtm


In  conclusion, we can now establish that:

·         the real poverty rate in Hong Kong is more likely around 3% after the government measures are applied, a far-cry from the 15% dictated by the current calculation methodology
·         The official poverty level cannot be compared to other developed economies as it does not use the same variables, resulting in an over-representation of Hong Kong poverty when compared to other countries with similar GDP-per-capita
·         Once the poverty rate calculation is amended, it would seem that complete poverty-alleviation is within reach with a bonification of current measures

I wanted to point-out that the Hong Kong’s Commission on Poverty is quite clear on the limitation of the current measurement method and therefore, cannot be faulted for merely following the government’s requirements.
To be used as a meaningful comparator of real poverty level among the 1st world economies, the Hong Kong government should align its poverty calculation on those of Canada, France, or Germany, which all include income from all sources.


Monday, October 30, 2017


letters@scmp.com

I refer to Alex Lo's October 23rd's article titled 'Policies on HK are more forward-looking" where he states "US President Donald Trump's unexpected victory has been a godsend. It exposes the unreliability and irresponsibility of a democratic society".  Actually, Trump's election does not do such a thing at all. Quite the contrary, it shows that through the electoral system, democracy has lots of checks and balance which makes it incredibly hard for Trump to push the most radical parts of his agenda. Something that would not happen in China as we see Jinping giving himself unchecked powers.

Actually, Democracy has been the most stable political system since the industrial revolution; a system most adapted to balance the need economic growth, and popular desires.

This is what the autocrats such as Mr Lo fail to understand about democracy: it trades short-term "disorder" for long-term stability, while dictatorships are orderly through force in the short-run and invariably finish in revolutions of the people.
JC Clement



The original article from South China Morning Post:
http://www.scmp.com/comment/insight-opinion/article/2116517/policies-hong-kong-are-more-forward-looking 

"Policies on Hong Kong are more forward-looking

Xi Jinping’s speech was without the warnings given by Hu Jintao against “external forces” and the need for a “grand united front”. Instead the focus was on long-term stability and prosperity

Critics of China will beg to differ but the policies of the central government annunciated by President Xi Jinping towards Hong Kong during the 19th national congress have been much more positive and forward-looking.
Gone are the warnings against “external forces” and the need for a “grand united front” in the speech given by then retiring president Hu Jintao at the 18th congress. Instead the focus is on long-term stability and prosperity, with such initiatives as the economic development of the Greater Bay Area of Guangdong, Hong Kong and Macau.
Concerns about foreign interference cumulated with the Occupy protests of 2014. But as the so-called yellow umbrella movement dies down, so too have fears about political intervention by foreign forces.
Meanwhile, the split within the loyalist camp between the so-called Leung gang (named after ex-chief executive Leung Chun-ying) and the Tang camp (after Henry Tang Ying-yen, his defeated electoral rival) has been mended under pressure from Beijing.

The tone of the central government today is much more confident and assertive. No wonder; after the debacle of the city’s failed electoral reform, Beijing has essentially forced all the major Western governments to concede that Hong Kong is solely a matter of China’s internal affairs. Besides lip service, no Western government will stand up for autonomy claims made by the local opposition.
US President Donald Trump’s unexpected victory has been a godsend. It exposes the unreliability and irresponsibility of a democratic society. As the most unprepared and inexperienced president in post-war US history, Trump makes Xi look like a world-class statesman.
No Western country can take a meaningful stance against China without US backing, not even Britain, now deeply mired in Brexit. And over Hong Kong, there is virtually no hope or incentive for them.

So all the noises being made about Hong Kong by busybodies, usually from the US and Britain, are just that – noises. Tory activist Benedict Rogers being barred from entering Hong Kong? Good for a few news headlines. The report by the US Congressional-Executive Commission on China on “the long-term viability of ‘one country, two systems’? Nobody reads it. Marco Rubio, who?
Hong Kong has a great future when it can sort out a workable and amiable relationship with the rest of the country. Its opposition camp just needs to stop all that self-destructive foolishness thinking it can buddy with Western governments to put pressure on Beijing."

Saturday, June 24, 2017

(Hong Kong) Misguided policy on Electric Vehicle



To Carrie Lam (mostly),

    I would like to react to the unfortunate decision of stopping the new car registration tax credit for EV (Electric Vehicles). While many have rightfully commented on how unadvisable this action from the prior administration was, I thought appropriate to support these comments with factual evidences, then, suggest better ways to achieve the goal of stabilizing or even reducing the ratio of private car to driving population in Hong Kong.
First, let’s take a look at the statistics for pre-EV tax-credits below:
Inline images 1
New private car registration 1981-1997 (above). Pre-EV tax credit (1997). Observe the trend-line.

Inline images 2
Then, let’s observe the new car registration 1997-2017 above, with the EV tax credit in effect. Note that the new car registration is actually growing at a slower pace. Provided there was no significant competitor in the EV market before the past 4 years, let’s not draw a final conclusion quite yet. However, this is certainly an indication that the long term trend does not support the action taken by the previous administration and that it couldn’t have been rooted in a serious analysis.


Inline images 3Src: https://qz.com/917491/hong-kongs-love-affair-with-tesla-tsla-vehicles-looks-set-to-grind-to-a-halt/
Now let’s observe the Tesla influence on new EV car registration (above). There was a huge pick-up from 2014, about a year into the Tesla model S introduction in Hong Kong. Understandably enough as Tesla introduced a luxury, high performance sedan car, which directly competes with the most popular brands sold in Hong Kong.
Now, did that correlate to a spike in new car registrations?

Inline images 4
Resounding no as the chart above shows! For the same period, for all new car registrations, no spike in the overall private car sales. Obviously, what happened is that Tesla EVs displaced non-EV luxury cars, as evidenced in the private car sales figures for April 2017, which are back to usual numbers, while Tesla have not sold any…
Now, there you have it, a policy not guided by facts, but then, what was the driver? Could it be the European luxury car makers’ lobby’s influence? Who knows…
In any case, this policy error can be repaired easily and efficiently. So, how would the new Hong Kong administration act to slow-down progression of private car sales?
In his June 18th piece for the SCMP, Mike Rowse suggests to cap the number of private vehicle. Maybe we’ll need to get there eventually. However, I think that the current issue has to do with insufficient tax de-incentives. There are many ways for the new administration to tax the private cars appropriately:
·         Have a hefty, non-creditable base tax
·         Double the current taxes, with half being modulated to the vehicles emissions (ie. No emissions, only a single instance of full taxes, and progress from there to double the taxes as level of car emissions increase). There is ample research available on the efficiency of such feebate scheme
·         Additional taxes on private car ownership, again modulated on emissions
Where there is a will, there is a way. Now, it is the core issue, isn’t it? What exactly is the will?

JC Clement
Jordan, Hong Kong


Sent to: ceo@ceo.gov.hk (Carrie Lam), letters@scmp.com, paul@designinghongkong.com (Paul Zimmerman)mike@rowse.com.hk (Mike Rowse) on June 25th, 2017

Updated 2017-DEC-21: 



Now that a few months have past, we can check if the government’s assumption that reducing the EV incentives would reduce the car purchases, we can clearly see that it has not been the case at all: http://www.td.gov.hk/filemanager/en/content_281/table41a.pdf

If we extrapolate November and December 2017 with the monthly average of 2017, we can see that 2017 is going to be just over 38,000 new private cars. More than 2016. This confirms that the policy or discontinuing the EV first registration rebate has been a complete failure and will have resulted in more street-level pollution.


Basically, I took the government numbers and compared the same period in 2016, then after the end of the rebate in 2017, for the most popular car brands. It is quite clear that what happened is that Tesla candidate buyers just shifted and bought a BMW instead. Again, proving the total policy failure.

I
f the government really wants to do something about abating the unchecked growth of private cars. Taxes them to death. And re-introduce the EV registration discounts so that new vehicles are cleaner.