The spin cycle

Before Sunday's by-election, Lau Nai-keung offered this "simple" analysis (End of the line for the pan-democrats? - subscription required):

All eyes are on the turnout rate for this Sunday's Legislative Council by-election. There are roughly 600,000 registered voters in the Hong Kong Island constituency. Judging by the results of the recent district council elections, the "loyalists" can be expected to rally upwards of 140,000 voters. Thus, Regina Ip Lau Suk-yee - backed by the pro-Beijing camp - can count on these votes.

Therefore, a turnout of below 280,000 - or 47 per cent - would mean defeat for Anson Chan Fang On-sang, who has the backing of the pro-democracy camp. The logic is so simple that it almost defies further  analysis.

The turnout rates of most by-elections are low; in the last Legco by-election, in 2000, the figure was less than 34 per cent. If that were to be repeated, Mrs Chan would suffer a humiliating defeat.

Well, as we know, she did not suffer a humiliating defeat.  Perhaps more Interestingly, Regina Ip, somehow contrived to get only 137,550 votes.  If we accept the figure of 140,000 "cast iron" votes for pro-Beijing candidates, she somehow managed to misplace 2,500 of them.  Hardly a success story. 

Yet the spin that is being placed on this is that the "normal" result is a 60:40 margin in favour of the pro-democracy candidate, and as Regina Ip got more than 40% of the vote she can be judged to have been a success. 

Predictably, that was exactly the line that Lau Nai-keung took this week (Hello and goodbye):

The result of Sunday's Legislative Council by-election falls into the category of what I call a "humiliating victory". This is especially so in light of the extraordinarily high turnout rate of over 52 per cent which, according to conventional wisdom, favours the pro-democracy camp.

A winning margin of just 12 percentage points for Anson Chan Fang On-sang over Regina Ip Lau Suk-yee broke the long-held 60/40 rule (traditionally, democrats should expect 60 per cent of the vote to the pro-establishment's 40 per cent). This gave the "loyalists" ample space to declare their own victory. Isn't it nice to have a win-win outcome?

You can't have it both ways.  If you argue before the election that Regina Ip was guaranteed 140,000 votes and that Anson Chan could suffer a humiliating defeat, how can you describe 54.8% as a "humiliating victory"?

It's also bizarre to hear Beijing loyalists say that the democrats will always get 60% of the vote - all the more so after District Council elections when the DAB did well.  The democrats are surely entitled to be satisfied with the by-election result, as Chris Yeung points out in today's SCMP (A split decision):

The jury is still out on the election debut of what has been deemed the joint ticket of Regina Ip Lau Suk-yee and the pro-Beijing, pro-government force in the Legislative Council by-election. Pointing to her 42.9 per cent vote share during a self-appraisal, the former secretary for security proclaimed her success in smashing the so-called "60-40 rule" for Hong Kong's direct elections.

She was referring to the widely held, though not necessarily accurate, notion that democrats should expect about 60 per cent of the total vote share in a "one person, one vote" election. The remaining 40 per cent would go to pro-Beijing, pro-government candidates.

Mrs Ip argued that, in view of by-election winner Anson Chan Fang On-sang's popularity, and her previous senior position in government, the former chief secretary should have been expected to garner around 70 per cent of the vote. In the end, Mrs Chan won 54.8 per cent.

Yet, Ng Hong-mun, a veteran adviser to the Democratic Alliance for the Betterment and Progress of Hong Kong, expressed disappointment with the result. He concurred with analysts that the margin of Mrs Chan's victory was larger than had been expected.

The Chinese-language Apple Daily quoted him as saying that they had predicted Mrs Ip would lose by no more than 20,000 votes; the actual figure was about 38,000.

But of course politics is like this all over the world.  Politicians are experts at finding highly-nuanced arguments that they they think make their party look good or their opponents look bad.  And we don't believe them.

Not sure why the SCMP bothers to print this nonsense, though...


Only in Hong Kong

A high-profile by-election in which the two main candidates are former civil servants (Democracy woman wins HK poll as the BBC rather strangely puts it).

How exciting is that?  In other places it might be a TV or film star, or at least a big-name politician, but not in Hong Kong.  No, we get two former civil servants, though admittedly both are very well-known.

One was widely reviled for her attempt to introduce security legislation (the so-called Article 23) that prompted 500,000 people to protest on the streets of Hong Kong.  The other ("Democracy Woman") is perceived as being unacceptable to Beijing, as if an elderly woman who ran the government under Tung Che-Hwa could really be any threat at all. 

Not that it matters, of course.  Members of the Legislative Council don't really have much power, so this amounts to an opinion poll on whether to press for democracy as soon as possible, or to be patient.  Which might explain why a meaningless by-election involving two former civil servants has actually been fairly lively.  Feelings do run high on both sides, and the two candidates represent what each side dislikes about the other.  Meanwhile, the rest of us look on somewhat perplexed.   

I suppose it's a classic 'chicken and egg' problem.  We don't have real democracy, so we don't have real political parties.  And life carries on fairly well in spite of that. 


Oligopoly

Recently, I have become rather bad at reading Hong Kong blogs.  Mainly it's sheer laziness, but the problem is that there are just too many of them, and having got them all set up in an RSS reader it's all too easy to check half a dozen and overlook the rest.

Which is a pity, because there is some good stuff out there.  And, no, Mr Fumier, I don't mean you.

For example, Learning Cantonese had a rather long post about the problems faced by the pan-democrats.  This is what I meant when I said that the biggest obstacle to democracy in Hong Kong is our political parties - it's so easy to find fault with all of them. 

First of all, the pro-democrats are, and have always been, a bunch of strange bedfellows united by a single issue. There have always been cracks, economic fissures, in Hong Kong's pro-democracy alliance. (Just as there are strange bedfellows, indeed, among the pro-Beijing camp). Strip away the eloquent philosophy, and what does a wealthy guy like London-educated Democratic party barrister Martin Lee have in common with a humble schoolteacher activist like democracy's great uncle Szeto Wah?  Fear of Beijing has been enough to cement the pro-Democrats together for a decade, as solidly as Tito held Yugoslavia.

There's also a reference to a book which I think I need to read.

Ten years after the 1997 handover, Hong Kong's battle lines are changing. The people, and the politicians of Hong Kong have begun to focus less on Beijing, and more on the enemy within--the collusion between home-grown tycoons and a government that exercises almost unlimited control over the city's wealth and development. (The way this system works to choke Hong Kong's economic growth and initiative is very ably explained by Alice Poon in her great book, and by my buddy Hemlock, in his.).

This led me to something else I had overlooked - an article by Alice Poon in Asia Sentinel:

Hong Kong’s proposed new competition law barely scratches the surface and leaves the oligarchs pretty much alone

Hong Kong is about to get a law sometime later this year designed to regulate competition in an economy that has always prided itself on being red in fang and claw. But don’t look for much substance. The oligarchs of Hong Kong have always been largely exempt from the hard scramble of real competition and the powers that be are making sure that the final law is going to be more form than substance ‑  no review mechanisms for the control of mergers and acquisitions, no criminal sanctions and no consumer protection provisions.

Although this is a city famously regarded as a territory of free marketeers, that is largely a false perception perpetrated by right-wing American think-tanks which consistently declare Hong Kong to be a paragon of competitiveness. What the libertarian think tanks measure are free ports with low-tariff regimes and fully convertible currencies. In Hong Kong, taxes are low, government is small, trade is free and business, credit and labor markets are fully deregulated.

But the fact is that Hong Kong’s trading companies, particularly Hutchison Whampoa and Jardine Matheson, operate a duopoly that stifles competition in supermarkets, petrol stations and drug store chains. In the late 1990s, the oligarchs, aided by government policy, famously drove Carrefour, the French retailer, out of town and put an end to any chance of so-called big-box retailers like Wal-Mart or COSTCO that would save consumers money and give them choice.

And, of course, if you search for a review of Alice Poon's book you will find one by Hemlock.  Who has his own book out now - and what's the betting that the "friendly journalist" who interviewed him on his website is the same person who interviewed him for Slate?  Yes, the blogger behind Learning Cantonese, Daisann McLane.

Incidentally, it rather amused me (and maybe nobody else) that Hemlock's book is published by Chameleon Press, who also published several of Nury Vittachi's books.  Or perhaps Hemlock and Peter Gordon (the boss of Chameleon Press) now have something in common.


Not ready

Hong Kong is not ready for democracy, according to the chairman of the DAB (Fury at DAB chief's Tiananmen tirade - subscription required):

Hong Kong will not be ready for universal suffrage until around 2022 because the people lack national identity and many still believe there was a massacre in Tiananmen Square in 1989, the leader of the main pro-Beijing party said yesterday.

In remarks that drew immediate condemnation from the pan-democratic camp, the chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, Ma Lik, said local students had not received proper "national education" since the handover and many still "care nothing" about the mainland.

He said one example to show Hong Kong society was not mature was people's belief that pro-democracy activists were "massacred" in Tiananmen Square in 1989.

"We should not say the Communist Party massacred people on June 4. I never said that nobody was killed, but it was not a massacre," Mr Ma told a media gathering less than three weeks before the 18th anniversary of the bloody crackdown on protesting students. "A massacre would mean the Communist Party intentionally killed people with machine guns indiscriminately."

Interesting to note that the SCMP itself has been criticized in the past for referring to the "Tiananmen incident" as if it were a minor disturbance in which a few people got slightly hurt.

Mr Ma, who is not known as an outspoken hard-core leftist, said universal suffrage could not be introduced before the public adopted "heart-felt" patriotism.

Although his views drew a strong reaction, he said they had actually moderated from those he previously held. "In the past I have said universal suffrage should be introduced in 2047. Now I think it is appropriate to introduce [it] around 2022 because by then, hopefully, half a generation would have gone through the new national awareness education."

Mr Ma said that "consciously or unconsciously" Hong Kong people were resisting the idea that the Communist Party was the ruling party of "our sovereign state" and were trying to draw a line between themselves and the party. "It is difficult to push for [universal suffrage] under these conditions." He said the Hong Kong government should take action to educate teachers about what happened at Tiananmen Square.

The biggest problem with democracy is that you never quite know how people will vote, and it works so much better if people are "educated" to vote correctly.  I believe they do this quite successfully in Singapore (amongst other places).

Or maybe the biggest obstacle to democracy in Hong Kong is that we don't have any political parties worth supporting...

[More here if you can't read the SCMP story]


Counted out

One thing I find slightly strange about (English language) Hong Kong blogs is that you very rarely get anything even approaching controversy, let alone any feuds, between bloggers.  Perhaps this is because there aren't that many of us, and that most people steer clear of politics. 

One exception is Roland Soong's ESWN.  I've mentioned this before (Lost in translation) and he has come under attack again for his habit of offering "expert analysis" in a very partisan way.  A guest contributor at Peking Duck generated a lot of response for his attack on Roland, and Tom Legg has also joined in on his blog.

The concern here is that a casual observer might believe that Roland is offering impartial analysis of the "facts" about how many people took part in a march for democracy, and what it all means.  Roland's technique is normally to question the estimates for the number of marchers, and then conclude that this indicates lack of support for democracy (The Unanswered Question about Hong Kong numbers):

But what is your explanation as to why 5,000 people showed up for the march when public opinion polls showed that 60% of the population are for universal suffrage? If you can solve that puzzle, then you will get 60% of 7 million people = 4.2 million people to march for universal suffrage. How can that sort of people power be stopped?

Clearly Roland is being disingenuous here, as Raj pointed out in his posting at Peking Duck:

It seems like quite an easy answer to me. Hong Kong people have indicated - quite consistently through polls - that they want universal suffrage. However they probably do not believe that protesting about it will make much of a difference. It's all very well that saying getting 4+ million people on the streets "cannot be stopped", but then again when did Hong Kong ever get 4+ million people on the streets? The UK managed much less than that in protests against the war in Iraq (Police said 750,000 - organisers said 2 million), despite the fact we have a population of over 60 million and there was generally a lot of opposition to the war.

I think that's correct, though I'd probably go further and say that Hong Kong people are also quite patient.  They became very frustrated with Tung Chee-Hwa, but are willing to give Donald Tsang a chance.  He knows that he has to do something about democracy, but mass demonstrations won't help him in negotiations with Beijing.  In fact, you only have to look to Taiwan to see that this form of "people power" really doesn't solve anything, and probably makes things worse.  Would Beijing react positively to 4 million people marching?  I can't see it myself. I think there's far more chance of Tsang sorting something out quietly with Beijing, as he has promised to do (Tsang targets 60pc backing for suffrage plan - subscription required):

Hong Kong will adopt a universal suffrage model that has international recognition, Chief Executive Donald Tsang Yam-kuen has pledged.

Without committing himself on when it could be implemented or what form it would take, Mr Tsang said he would try to forge a proposal that would win the support of 60 per cent of the public. He said Hong Kong people would not accept any proposal for universal suffrage at the expense of the city's prosperity, way of life or relations with the central government, and again called on different political forces to try to reach a compromise.

If he fails, it's possible to imagine another mass demonstration in a few years time, but Roland must know that 1 million would be more than enough to make an impact. 


A small variance

It's hardly unknown for a government to have a giveaway budget just before an election.  Yesterday there were all sorts of tax cuts and rebates, and later this month we have the election for the Chief Executive.

Except that we already know who will win the election, and this "bonanza" ought to be the cause of some embarrassment to the government. 

After all, it was only a few months ago that they were saying that we had a big problem with the budget deficit and needed a Goods & Services Tax (GST) to sort things out.  At that time they were predicting that this year's budget surplus would be only HK$5.5bn, and that in years when the economy was weaker there would be a deficit.

Yet here we are with a HK$55bn surplus, and forecasts that this will continue for the next few years. 

The government will give most people back 50% of the salaries tax they have just paid, and there are also some fairly modest reductions in the rates of salaries tax that will mainly benefit the "middle classes".  Those on the very highest incomes will benefit the least, because the "standard rate" of 16% remains unchanged.

If the latest forecasts are correct, we can surely expect further cuts in salaries tax, and I do hope this is the last we hear about GST.

Jake van der Kamp has more facts and figures (subscription required)

Continue reading "A small variance" »


What was the question again?

The SCMP seem to have wasted some money on a survey about what 'opinion leaders' think about tax reform. And the answer is, er, well, actually they aren't quite sure.  However, having paid for the survey, the SCMP were determined to publish it (though maybe it wasn't wise to make the actual Powerpoint presentation available for download, which is what they did on Monday, and it's now been replaced with a Powerpoint Slide Show).

Six out of the 700-odd respondents apparently felt that the tax base was too wide, which is an interesting point of view. However, when asked to explain themselves, four of them argued that high land prices equate to a form of indirect taxation. Which is true - up to a point, but the people who are most affected are the middle-classes who already pay salaries tax. I have seen it argued that everyone pays this indirect tax through higher prices in shops, but that's quite a stretch, and certainly not relevant to this argument (after all. you could argue that almost any tax paid by companies is passed on to consumers).

More puzzling are the 26% of respondents who seem to believe that the low rate of profits tax is one reason why the tax base is too narrow. I hope they don't really think that, because low tax rates reduce the revenue but they don't make the tax base narrow.  OK, yes, it's easy to get confused on this, because what the government is really concerned about is tax revenues, and the narrow tax base is seen as a primary cause of this, but they are two separate issues. 

Fortunately they did talk to some people who at least understood the questions they were being asked:

79% of respondents identified that the fact that only 35 per cent of the working population pay salaries tax as a problem.

Correct answer, but hardly a startling insight.  However, I'm not so sure about this one:

65% said that one cause of the narrow tax base is that only 1.2 per cent of Hong Kong's 63,000+ corporations pay 64 per cent of profits tax.

Is that really a cause for concern?  There's a similar phenomenon with salaries tax, because Hong Kong has a small number of very rich people and very profitable companies, but it's nothing to do with the tax system.  If the government can find a way of widening the tax base, it would probably reduce the percentage of tax revenue from the very rich, but only marginally, and that's not really the point.      

The solutions offered by these 'opinion leaders' include a luxury goods tax, green taxes, and a land and sea departure tax (I thought they were going to introduce once of those?), none of which are likely to raise enough to make a different (and isn't a luxury goods tax just a variant on GST?).  There was also support for raising the rate of profits tax, even though that's not going to widen the tax base.  More logically, there was support for capital gains taxes, tax on worldwide income, and tax on dividends, none of which seem likely to find favour with the government. 

So nothing much useful there, then.


Beware of the leopard

One of the better jokes in the Hitchhiker's Guide to the Galaxy is when Arthur Dent is informed that the plans for the (imminent) destruction of Earth were on display for nine months and no-one objected.  It seems that the something similar happened with the government's plan to demolish the Star Ferry Pier. After they started knocking it down, the  protests started, so the government pointed out that this had been planned for a long time and they had even been through one of their famous "consultation" exercises.  No-one had objected, and now it was too late.

Of course these plans weren't actually on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying 'Beware of the Leopard', but the effect seems to have been much the same. 

Which is strange really, because you'd think that the opening of a new ferry pier (and all the talk about reclamation) would have been a pretty big clue that the old ferry pier would soon be gone. However, when the demolition work started the protestors arrived, and (as the SCMP explained last week) the government should have expected this:

For five years it has been in possession of a study of the historic value of the Star Ferry and adjacent Queen's piers, as part of an environmental impact assessment of the reclamation. The report describes the Star Ferry pier as a building of great significance in the city's transport history, and predicts accurately that its destruction would "likely raise public objection and dismay".

The few members of the public who had read the report could be excused for naively believing the piers would be preserved. But reading the report was easier said than done, until conservationists resurrected a copy this week in a last-ditch attempt at preservation.

Unlike other reports on the reclamation, it was not posted on the government website and the hard copy was available for public inspection only within working hours at a government office. Officials deny hiding the report for years and blame technical problems. Nonetheless, it is a cautionary reminder that it is not uncommon for governments to tell people what they want them to hear.

Communication is about listening to what people say, and making sure everyone understands what you say. If people haven't understood, then your "consultation" has been a failure, and you will appear arrogant and out-of-touch if you try to argue otherwise.   

I am not convinced that people in Hong Kong really care about the Star Ferry pier itself - it's not exactly a distinguished piece of architecture. It's more of a protest against the way that the government and big business simply don't seem to care what ordinary people think. There was nothing wrong with the Star Ferry where it was, but it got in the way of another grand plan, so it had to go.  That's why people are not happy. 

Incidentally, I see that there is now a plan to extend the tram system to the new Star Ferry pier. Well, I suppose we need something to replace the rickshaws.  All part of the integrated transport policy, no doubt.


Stubborn?

Hemlock has noticed this article from the Financial Times (also here):

Yet a belief persists in Hong Kong that its future interest lies, not in accentuating its distinctive strengths, but in blurring them by throwing in its lot with the mainland. Sooner or later, the argument goes, it will be enveloped economically by its giant neighbour, so why not accept the inevitable now?

The argument has been appropriated by Hong Kong tycoons, who calculate that telling Beijing what it wants to hear will win them commercial favours. Beijing treats their pleading as the voice of informed opinion in the territory.

Though superbly administered, Hong Kong is inadequately governed. The executive, led by Donald Tsang, lacks a political compass. Its strategic vision is dominated by an infatuation with big projects. Many seem conceived out of a stubborn desire to display political authority. When, like a recently mooted goods and services tax, they sink for want of public support, Hong Kong's leaders tend to conclude that the reason is not bad policies but failure to push them hard enough.

That's a favourite refrain of companies that don't listen (whether to their employees or their customers) - "if only we could get people to understand what we are doing, they would agree with it".  Oh no, they wouldn't, so please stop patronising us.


Small election, not many hurt

When I was walking to the supermarket on Sunday I was slightly surprised to see a police wagon driving along and a couple of policeman standing by the side of the road looking bored. Then I remembered that we were having an election.  How could I have forgotten?  Well, maybe because (like most people in Hong Kong) I don't have a vote in this election - and of the 200,000 who do, only just over a quarter actually bothered to vote, so I'm not surprised the policemen looked bored.

Welcome to the surreal world of Hong Kong politics.

The only point of interest in the election was whether the pan-democrats could win more than 100 seats on the Election Committee, enabling them to nominate a candidate (Alan Leong Kah-Kit) to stand against Donald Tsang in the election for a new Chief Executive next March. They did, and they will, but they also know that he will lose (because the Central Government appoints most of the members of the Election Committee).

This brings us to the central problem of Hong Kong politics - the pan-democrats are by nature an opposition grouping, which will no longer be relevant when there is the possiblity of gaining real power. Like all single issue parties, the irony is that if you are successful you should cease to exist.

Therefore it isn't relevant whether Alan Leong would make a good CE or not, because he isn't going to win the election. His policies really don't matter. Equally, you may well think that Donald Tsang has proved himself to be a competent CE and deserves to be re-elected, but that isn't the point either. In fact, in a totally free election, Tsang might well win, but then if we had a totally free election he would probably be up against a stronger candidate...

I suppose the only positive thing that can be said about all this strangeness is that it's better to have an election than not to have one - even if we do know the result in advance.