tim's experiment

It seems the Financial Secretary, John Tsang, also has a blog. There is no need to read it, because the contents are usually taken up by local newspapers. This is a pity, because they do not inspire confidence. Mr Tsang’s latest outburst is a good example. Hong Kong’s low unemployment rate was in danger, he feared, because of the decline in the number of mainland visitors and the somewhat smaller decline in their spending. “I was quite worried when I saw the figures for retail sales in April,” the Standard quoted, “If the external economy does show obvious improvement [shouldn’t that be doesn’t?] while retail sales continue to fall, the employment rate will face immense pressure.” As so often in pseudo-intellectual discussions of the economy, we are in the presence of a mixed metaphor here. What it means in concrete terms is that if mainland shoppers are less numerous or less profligate then some shops will close, thereby throwing their staff out of work. This might lead to an increase in the jobless rate, which is currently 3.1 per cent. As there are always some people resting between engagements this is virtually zero.

What Mr Tsang is ignoring is the huge change which has swept Hong Kong’s retail sector in response to local landlords’ discovery that selling over-priced handbags to mainlanders is the most lucrative use to which they can put their properties. Shops which used to sell goods which local people needed have closed and been replaced by locust-orientated luxury outlets. Before the influx of mainlanders we did not have rows of empty shops, bereft of staff. We had a flourishing retail sector catering mainly for local needs. If selling expensive crap to mainlanders is no longer the retail racket du jour then it will be replaced by something else. This is the way the Invisible Hand works. The big difference will be that landlords will no longer be able to charge such high rents, a change which I am sure will produce widespread joy. Employment will not be affected at all.

Of course Mr Tsang may well be expecting the employment rate to increase anyway. The current rate is the lowest in 16 years. This suggests that it is a bit of a statistical blip and the next figure will be higher. This can then be blamed on anti-mainland sentiment, Legco filibustering or the Occupy Central movement, the three things which get blamed for everything these days. Actually I find it difficult to believe that Mr Tsang is seriously concerned about the unemployment figure. It is of course one of the things by which Financial Secretaries are judged, but Mr Tsang would have resigned long ago if he cared what people thought about him. Financial secretaries, chancellors, Fed Chairmen and such like people go through a regular process. For a year or two after they are first appointed they are indoctrinated by rich people, their lobbyists, liars, supporters in university economics departments etc. so that they realise their main function is to serve the interests of the rich – or in the popular euphemism, business. Once they have learned this lesson they become a valuable asset, and are described as flatteringly indispensable to the health of the economy (by which we mean business, by which we mean rich people). In Mr Tsang this process has now gone so far that the primacy of the interests of landlords is taken for granted. The only thing that needs thought is finding an acceptable explanation for running the economy in their interest. Nice try.