tim's experiment

Leo Goodstadt’s latest book, “A City Mismanaged” makes few concessions to those of us who read for entertainment. But it is worth a visit if you really want to know what went wrong with post-Handover Hong Kong.

Future historians will find some of this story difficult to believe. In the 80s there was a great fashion under the Reagan and Thatcher governments for the idea that almost all state activity was inefficient, and society could only benefit from providing the maximum of freedom for market forces.

Over the years the flaws in this line of thinking became obvious. In the countries where it originated Ayn Rand is now regarded as a daft old bat and the Chicago School of economics as a shared delusion with few points of contact with reality. Privatisation is not the answer to all questions and the fad for market forces easily degenerates into government in the interests of the rich.

These lessons, however, somehow failed to find their way to Hong Kong, where a succession of Chief Executives succumbed to free market fundamentalism, and in the process dismantled much of Hong Kong’s already far from generous welfare state.

Mr Goodstadt blames some of this on the ministerial system. Those who reach the top of the Hong Kong civil service are generally both intelligent and competent. Those who catch the eye of the Chief Executive (and pass the surreptitious vetting by the Liaison Office) generally are neither.

Mr Goodstadt also notes that tinkering with the boundaries between bureaux has left some of the new bureaucratic empires unmanageably big, while still managing to leave important issues straddling two or more secretaries.

But the basic problem, he argues, comes down to a misreading of the Basic Law, which actually gives Hong Kong people the right to the same services and rights as they had before, a point overlooked in favour of the clause about balanced budgets.

He points out that the central government seems a bit puzzled by the ministerial masochism it encounters in Hong Kong, and occasionally urges our local leaders to focus on local social problems.

He tracks the consequences of neglect and parsimony in four areas: health, social welfare, education and housing. In this last he adopts an interesting perspective and I found myself thinking heretical thoughts.

It was an axiom of the Thatcher years in Britain that people should be encouraged to own their own homes. And to this end a lot of public housing was sold to its occupants at knock-down prices.

This idea was imported uncritically to Hong Kong, and the provision of public housing was curtailed in the hope that private production of flats would take up the resulting slack. It did not, of course, and public housing is now back on the to-do list.

But it still seems taken for granted that the desirable housing solution for those who can afford it is an owned flat in a large tower block.

Mr Goodstadt points out that this approach leads to long-term problems. The owners are jointly responsible for the shared parts of the building, including the outside walls. Sooner or later expensive maintenance bills will come rolling in.

In some cases, unhindered by the ICAC (which does not find this area very interesting, apparently) the price of the work is artfully inflated to enrich the contractors. But even if it isn’t, a bill in the region of $200,000 is not uncommon, and this is a very large lump to extract from an ordinary middle-class family.

Note that in England the housing stock eagerly distributed to its occupiers consisted largely of two-storey houses. Maintenance is a continuing activity, what needs doing is visible, and many occupiers can undertake some of the work themselves.

Mr Goodstadt notes that the owners of flats in Hong Kong blocks tend to put off maintenance, a false economy. But this is probably inevitable. The owners’ joint committee will be composed of volunteers, and one of their main motivations for serving will be to keep costs down.

Even if this is not the case, however diligent the owners and conscientious the government’s supervision, a high-rise block is going to be prone to occasional mammoth bills rather than the steady drip produced by a suburban semi.

So I wonder if this preoccupation with ownership is really as good an idea as it is cracked up to be. A survey of 12 developed countries conducted by a team at Harvard University found a wide variation in attitudes to renting and owning.

The proportion of the population living in rented homes in 2016 varied from a low of 25 percent (in Spain) to highs of 50, 55 and 60 per cent (in Austria, Germany and Switzerland respectively).

The report noted a tendency for owner-occupiers to prefer single-family dwellings, while a large supply of flats in blocks was reflected in a large population of renters.

I infer from this that there is nothing wrong with renting, and no particular merit in owning, especially if you are in a large multi-storey block with the prospect, sooner or later, of a large bill to, say, replace the lifts.

I realise that encouraging renting would require some dramatic changes in the way the government supplies and taxes land, and would eventually – and rightly – lead to legislation to curtail excessive exploitation by greedy landlords.

It would also disturb the cosy arrangement by which a small coterie of developers enrich themselves fabulously by paying huge land prices and building flats for sale at commensurately high mark-ups. Well wouldn’t that be sad!