January 31, 2005

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Dinner and democracy

I am a big fan of ESWN. Amongst other things tt constantly has thought-provoking, well written and cosmopolitan posts on Hong Kong and China. Allow me to take a leaf from Roland's book and link his dinner party with a post on HK's income tax and mix it all in with a dose of democracy and a pinch of blogging.

Firstly the dinner. I'll let him set the scene:

This was the annual shareholders' meeting for my cooperative apartment building in Hong Kong. There were about 10 people present, and we dealt with the business issues quickly and then we sat down for the meal. As we ate dinner, we had a chance to talk about other matters.

Who are these people? There was a doctor, an English-language teacher, a financial advisor, a retired elderly lady, a restaurant owner and three factory owners. Their ages range between fifty to eighty-three. Given that they own apartments in one of the most exclusive neighborhoods in Hong Kong (note: Jackie Chen just bought a house down the street), they are presumed to be among the upper class elite here.

What did they talk about? Read the post. But here's the conclusion:
I am thinking about the Hong Kong political blogosphere. I must say that those who write about politics are predominantly oriented towards the so-called pan-democratic 'grass roots' mindset. Who would speak up consistently on behalf of people like my fellow shareholders? Nobody I know. This creates a skewed representation of public opinion in the manner of the "Spiral of Silence" of Elizabeth Noelle-Neumann -- a small self-selected group dominates the share of voice among those who speak out, thus creating the impression that they represent the majority.

So why won't they speak on their own behalf? These people are too busy looking after their businesses to blog!

So there you have it. A sliver of the upper class elite are more interested in the status quo but are too busy to do much about it. To be fair the group were equally unhappy with the HK Government. On the other hand, a couple of hundred thousand Hong Kongers care enough each year to march for democracy. It would be great to have more views and voices in HK blogging so this could be debated in greater depth. The barriers to entry in blogging are extremely low and it needn't take much time. If they want to join the debate, let them. Otherwise they forfeit their right to be a part of the decision.

ESWN also links to a Media Matters fact-check on HK's flat tax regime (a related MM post on the issue is here). The MM people are correct. HK's flat tax is paid by only a tiny minority of all taxpayers. But it also highlights one of the failures of HK's governance. Firstly the numbers:

In the assessment year of 2002-03, among the 3 million or so working population, only 1.2 million people are subject to salaries tax. And among these taxpayers, only 13,000 are subject to the standard rate...According to government figures, the total number of people paying the standard rate of tax will rise to 27,000 in 2003-04 and 44,000 by 2005.

With roughly 3 million workers in Hong Kong, the 44,000 expected to pay the standard rate of tax this year is less than 1.5 percent of the total.

HK's standard rate of tax is 16% of income after allowances. Otherwise people are taxed on a sliding scale, with a person earning the equivalent of US$33,000 paying US$75 income tax. While this is a boon for the vast majority of HK workers, it means HK's Government receives little in income tax. Instead the Government relies on other sources of income and especially land sales and profits tax. What does that do? Let's make a heroic assumption that Governments are rational economic actors. Government looks to maximise its revenue. So it is catering to those who keep it in power and pay it revenue. In Hong Kong this means the Government has incentives to pander to property developers and business tycoons at the expense of the vast majority. There are no elections and most pay little tax. So the Government follows its incentives. If more Hong Kong workers were paying more income tax, you can be sure Government would be even more responsive to their views. Instead the Government is contemplating a regressive flat sales tax to provide a steadier revenue stream that is not at the whim of the property and business cycles. I am not talking about raising income tax rates in Hong Kong. I am talking about broadening the income taxpaying base by reducing allowances and/or lowering thresholds. Anywhere else in the world someone earning US$33,000 is paying far more that US$75 in income tax.

A bargain in the making: an increase in income tax payments in return for democracy. If the Government took the advice of Roland's dinner guests and allowed more economic migrants they'd be laying the groundwork for improved revenue, make the factory owners happy and maybe even advance the cause of democracy in HK. They might even be moved to blog about it.

posted by Simon on 01.31.05 at 03:38 PM in the Hong Kong democracy/politics category.


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Excerpt: wqiq
Weblog: fihiie
Tracked: April 7, 2005 07:35 PM


alas, the real barrier is not technological in nature; it is their perception that blogging has no material significance with respect to changing things in the real world at this moment in time. to put it bluntly, blogging is a just a small circular jerk-off that will not affect public opinion or government policy significantly. and I am afraid that they are right -- at this moment in time. we will have to wait to see what the future brings.

and it isn't even just about blogging either; they don't bother writing to newspapers or calling radio talk show programs either, because that too is a waste of time when there is a government too timid to act on anything because they are afraid of volatile citizens.

if this was the united states, they might have form a lobby group of factory owners, donate tons of money to re-elect senators and congressmen and then get their preferred legislation passed. here, they don't have the time to deal that mind of stuff.

they are economic opportunists. they will take whatever is out there, and go with it. that is why they are talking about moving to macau; and if they have to move to cambodia, they would too.

yes, we can just write them off because they don't bother to engage. but if we are talking about hong kong's prosperity and competitiveness, then these are the key people who are available for the taking. why send them away?

posted by: eswn on 01.31.05 at 06:54 PM [permalink]

professionally, i am known to have an elephantine memory.

i will lead you back to a comment of yours in july 2004 about a post of mine on the Hong Kong Legco functional constituency positions.

let me ask you now: given what was said about my dinner with the factory owners at the dinner, do you think that they would be fairly represented in a completely directly elected Legco? or would they need a functional constituency representative?

incidentally, i suspect that they don't care one way or the other, because they will simply accept what happens and look for the best opportunity.

this question is really from the perspective of what is best for Hong Kong as a whole.

posted by: eswn on 01.31.05 at 10:35 PM [permalink]

I remember that comment. My position hasn't changed. Those factory owners should not have a disproportionate representation via functional constituencies. The main principle of a democracy is "one person, one vote". Factory owners don't deserve, even if they don't care, to have a disproportionate share of the vote. If there was universal suffrage, everyone would be fairly represented. I suppose it depends upon what you classify as "best for HK". Churchill said democracy is the worst system of government we have except for all the others.

One other point. The apathy of these people, for mine, means they forfeit any rights to complain. I understand your point. Instead of doing something about it they just go to where the next opportunity is. To me that seems almost cowardly. Clearly they have, in the past, been good for HK. But if they have such a mercanary attitude, then HK will be the better for their decision. It has the added bonus of forcing HK to become more competitive to retain their interest as well. It's just that our unrepresentative Government is doing an appalling job of it. On that we can all agree.

posted by: Simon on 02.01.05 at 07:08 PM [permalink]

it is odd that i find myself sometimes speaking on their behalf. my values could not be more different from their 'amoral individualism.' yet it saddens to me to see these opportunities for Hong Kong slip away so quietly.

posted by: eswn on 02.01.05 at 10:18 PM [permalink]

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