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Land And The Ruling Class In Hong Kong Hardcover – December, 2005
The Amazon Book Review
Author interviews, book reviews, editors picks, and more. Read it now
"Oligopoly pays." That's the chief lesson emerging from Alice Poon's excellent survey of Hong Kong's real estate and infrastructure economies. Although Hong Kong is often characterized as one of the world's freest economies, it is in fact controlled by a handful of wealthy individuals and companies who stifle--rather than encourage--competition.
Poon dissects the sinews of Hong Kong "big money" and isolates its key components, those being legislative and legal sway over land and competitive policies. Hong Kong's biggest fortunes owe their growth and security to dominance over a wide spectrum of businesses ranging from transport, public utilities, supermarkets, and food distribution to, most importantly, land development. Huge amounts of real estate are developed by a handful of large companies who control all aspects of supply, construction, and property management. Indeed, the usual hallmarks of classically defined competitive markets are nearly absent; instead, Hong Kong's market structure suffers from steep barriers to entry and government policies that serve to bolster the market positions of a half dozen huge conglomerates.
The situation of near-anarchy for Hong Kong's corporate heavyweights may make for impressive annual reports but does little to relieve Hong Kong's mounting social and economic tensions. Poon carefully details how government "of the rich, by the rich, for the rich" in Hong Kong has damaged civil norms and deprived its population of economic security and well-being. Not surprisingly, articulate protest groups have lodged forceful criticism of "business as usual" and gained widespread support, proving that discontent is deep-seated and justified.
Poon's concise, well-argued analysis is one of the few available English-language sources on Hong Kong's predicament. While Hong Kong's once-vigorous and argumentative press has lost its teeth following the takeover, new outlets such as blogs have assumed huge importance as a barricade for free expression and democratic principles. With Shanghai rapidly eclipsing Hong Kong as the banking and finance powerhouse for China's breakneck growth, there's a chance that competition may in fact re-emerge and make for the kind of "popular" entrepreneurship long absent in Hong Kong.
Gary Watson --Canada Book Review Annual September and October 2007
From the Inside Flap
"Land has worked as an enriching agent for the ruling class in Hong Kong. Existence of such a ruling class, which thrives on land and spatial monopoly and control of other forms of economic assets, is itself a symbol that contradicts the ideals of a free economy - a state that Hong Kong is ironically believed to be in."
"A free economy is one where people have the opportunities to demonstrate their individual worth and where they enjoy freedom of upward social mobility. Monopolies, in particular land and spatial monopoly, on the other hand, which are the cornerstone of economic concentration, are designed to prevent an economy from operating freely and effectively, for all people and at all times."
"If Hong Kong is ever to have a truly free economy, one that is worthy of commendation by the international community, not only are reforms to her systems inevitable, but reforms to her society's mentalities are also a must."
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Top Customer Reviews
The "developer cartel-hegemony" hypothesis proposed by the author is that recapture of land value and its distribution can increase social and economic fairness. Besides, the government cannot deliberately have blatant preference for local conglomerates (i.e. nine-point plan in 2002) which stifles fair market competition and economic efficiency. Undisputable is the fact that the real estate market in Hong Kong is highly dominated by a handful of developer conglomerates. They have hoarded huge land reserve and investment property portfolio which can enable them to extend their preponderant financial power to other industrial sectors such as utilities, public transport, and retailing. According to the author, the logical solutions to redress this economic malady encompass every possibility to increase supply of land and affordable housing as well as to levy real estate tax on undeveloped lands. Moreover, a competition law with a statutory body to enforce it should be implemented in order to shield the majority of middle and lower classes from any detrimental effect of market monopoly and oligopoly.
There is a blizzard of synchronic and diachronic factors to explain about high housing prices in Hong Kong. It is incontrovertible to view that high land premium policy is a result of the maintenance of simple tax structure with low tax rates in order to position Hong Kong as the most favourable destination for investment and tourism relative to other countries in Asia-Pacific region. The low interest-rate environment, high inflationary impact, and the inflow of buyers from mainland China have recently compounded high housing prices problem since 2008 in which developer conglomerates should not be fully responsible for it.
Moreover, it is too arbitrary to accept the author's view that wide income gap between rich and poor is due to the presence of developer cartel-hegemony in different industrial sectors. US has Gin-coefficient figure about the same as China and Hong Kong, although US is the most democratic and liberal country in the world. The happiness of society does not necessarily equate to high additions to GDP growth (Richard Layard, Happiness: Lessons from a New Science). There is nothing wrong to accept the author's view that government policies should be more oriented towards fairness and well-being of people in return for social cohesion and harmony in Hong Kong.
This book lacks sufficient quantitative evidence to justify for the correlation between the dominance of a handful of developer conglomerates and social and economic ills to the majority of middle and lower middle classes in Hong Kong. Nor is it fair to associate developer conglomerates with the status of feudal lords in Western Europe in the medieval era. Nonetheless, this book contains useful information on land and housing policies in Hong Kong (Chapter 2).