Friday, 7 March 2014

Li's Temper Tantrum

Li Ka-shing warns Hong Kong could slide into populism
Tycoon Li Ka-shing is completely unaware of what is really going on in Hong Kong these days.

In an interview with mainland Chinese news outlet caixin.com, he said Hong Kong was like a "spoilt child" and that the city was headed towards populism. If this trend was not stopped, Hong Kong could go "totally wrong" in as little as five years.

Admittedly I had to look up the word "populism", which is a political philosophy supporting the rights and power of the people in their struggle against the privileged elite.

So Asia's wealthiest man believes there's a war on the rich.

Perhaps we can explain why...

The gap between the rich and poor in Hong Kong measured by the Gini Coefficient in 2011 was 0.475, unchanged since 2006, but up from 0.470 in 2001. A Gini Coefficient of 0 means perfect equality, and a number closer to 1 means maximum inequality or one person takes all. In 2012 China was at 0.474.

He is being interviewed by Caixin editor-in-chief Hu Shuli
Globally Hong Kong's number is relatively high on the inequality side and we can see that anecdotally from significant rent increases, property prices, to mom-and-pop shops closing down to make way for luxury brands and jewellery and watch stores that locals can't afford.

Salaries have not kept up with inflation and the property and stock markets have slowed, making it harder for people to make a fast buck.

In addition, young people find it hard to land a first job that is related to what they studied and are stuck doing retail or service work to pay the bills.

More importantly Hong Kong has over 1 million poor people -- such a wealthy city -- and yet there are many people barely eking out a living here.

Li claims to be sympathetic towards these people when he says: "My family was poor and there was a time when we were left completely destitute. I will never forget that. I very much understand what it is like when you need to worry about making ends meet every day."

But he says because of poverty in the city this has resulted in populism and that "the important point is that society should find ways to resolve problems and not get stuck in a state of anger".

Hong Kong people wouldn't be so angry if tycoons like himself didn't create such huge conglomerates that created practical monopolies, making it impossible for other competitors to even enter the market, from construction and utilities, telecommunications and shipping to wine, property and pharmacies.

Li trying his hand at making scrambled eggs
In fact he even says, "Helping the poor cannot solve the problems of declining competitiveness."

Poverty and competitiveness are two completely different issues, and for him to link them together exacerbates the increasing gap between the rich and the poor. He is blaming the poor for Hong Kong's lack of competitiveness for using up so many resources that could have been invested in innovation and technology.

As a venture capitalist in many start-ups, why is Li complaining about this? He has made a lot of money from his investments in some that have paid off grandly including Facebook, Priceline and Bitstrips, and most recently plant-based eggs.

He says Hong Kong is a spoilt child, but really it's him he's referring to.

He wants the city to do more for him. While we appreciate he has donated a lot of money to Hong Kong, he still has so much more left over for himself, his two sons and grandchildren. As my great aunt says, he can't take all that money to heaven, so what's the point of being so obsessed with making more?

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