Where inequality lives

The coronavirus is exposing the divisions in our city and showing up how little the government has done to address the problem. 

In the SCMP: Adobe_PDF_file_icon

Coronavirus has pulled the Gini out of the bottle

One of the most disturbing events this week was the late diagnosis of a young woman who had been to her private doctor three times and been told to go home.  Readers might be surprised that a Hong Kong-registered doctor did not suspect coronavirus.  She unintentionally infected at least six people, with many others facing quarantine, and hundreds requiring testing[1],[2].   When she was finally rushed to hospital, unconscious, she had to be ventilated.  All of Hong Kong wishes her a full recovery and that her employer generously compensates her for workplace hazard. 

 

Her job was the night shift at Kerry Logistics’ warehouse in Kwai Chung, labelling pre-packaged fruit and vegetables. Two other women had been reported positive from the same location a month earlier[3]; they and 25 co-workers are now in quarantine.  That makes maybe 28 people working round the clock, risking their lives in this most dead-end, useless, unnecessary, unproductive and soul-destroying job.  The labels, as we know, are required by the government to be put on all imported consumables.  They contain the same information as printed on the packet and are often are creased, folded, or illegible, and obscure more critical instructions and dosages.

 

These workers I suspect are mostly women, struggling to put bread on the table in an overnight job, perhaps when the children can be looked after at home.  It’s not too hard to guess that they probably don’t earn much more than the minimum wage; which our leaders believe is sufficient at a paltry $37.5 an hour.  And all because some overpaid, busybody civil servant decreed that labels should be placed on imported products – even if the products come from extremely high-quality sources.

 

How do we even know that the information is correct?  Why not put a card or QR code at the point of sale?  Why are only ingredients and not the product description itself labelled?  Many people shop with their phones using Google translate if necessary (other fine translation programs are available).

 

Of course, the permanent and pensionable jobsworth who thought up this inane task for human beings may argue that the job brings a few much-needed dollars to desperate and unskilled families, but as an extremely wealthy city  – we have got to be better than that.  The government is nowhere near developing worthwhile jobs for its population, launching committees that pay the same unimaginative has-beens to write a report that spends money on ineffective projects.  Those in authority are too comfortable, thank you very much, to understand the plight of the poorest “30 per centers”.

 

It has been a turbulent year since a million people marched in Hong Kong for June Fourth last year.  It is hard to remember that the original narrative for Occupy Central in 2014 was that young people felt that they had no real hope, no job opportunities, or a chance to leave home without being crushed by the cost of merely living.  Their cries went unheard by our last two wealthy, cloth-eared Chief Executives, who living in the airconditioned seclusion of Government House and the official BMW 7 series, compounded the problem by ineptly handling the discontent.  Wilful misunderstanding of the issues turned economic problems into political ones.  They allowed the cartels run wild, while spending public money on vanity, white elephant infrastructure projects.

 

The coronavirus is exposing the divisions between haves and have nots, even as global central banks print money to prevent recession that  make the rich richer.  When that policy explodes, young people will lose their jobs anyway.  Hong Kong now occupies the shameful eighth place of most unequal societies in the world (according to the World Bank) with a Gini coefficient of 0.54[4],[5][6].

 

The coefficient ranges from 0 (perfect equality) to 1 (one guy owns everything). The rampantly capitalist U.S. at 0.45 is actually less than Communist China (0.47), which is much higher than developed markets of the U.K. (0.32), Australia (0.30) and Germany (0.27). The liberal capitalist, democratic, welfare state in Europe was born out of two world wars, which destroyed faith in the judgement of powerful men to lead in the interests of others.

 

The riots in Hong Kong, and the burning of the U.S. last week, were exacerbated by wealth and opportunity inequality.  In the U.S. it is reinforced by the racial divide and leadership that seeks power by dividing people still further.  At least our young people did not help themselves to the jewellery shops.  There is much schadenfreude in China about the riots in Washington – but try doing that in China, where the police would take a very dim view of photographing their operations!

 

Unfortunately, this week has shown that governments in any country around the world are unlikely to do much to correct the wealth inequalities that have undoubtedly expanded as a result of the coronavirus economic lockdowns. Investors should be prepared for more social disobedience, protests, riots, flashpoints, divisions and indeed a threat to the status quo.   Solutions range from forcing equality by regulatory or fiscal means, or firing live rounds into the crowds of the discontented.  The first is a lasting solution; the second will ferment more discontent.  Investors should maintain their exposure to equities as governments try to pay off protesters; especially those that make tear gas – and the antidote, milk.

Richard Harris is Chief Executive of Port Shelter Investment and is a veteran investment manager, banker, writer and broadcaster and financial expert witness

[1]https://news.rthk.hk/rthk/en/news-programmes/this-episode.htm?cmsid=78&episode_id=685763&livetime=20200601000000. Minute 6:37

[2] https://www.scmp.com/news/hong-kong/health-environment/article/3086933/coronavirus-amid-new-hong-kong-infections

[3] https://www.scmp.com/news/hong-kong/health-environment/article/3086865/coronavirus-hong-kong-records-first-locally

[4] https://worldpopulationreview.com/countries/gini-coefficient-by-country/

[5] https://www.scmp.com/news/hong-kong/society/article/2165872/why-wealth-gap-hong-kongs-disparity-between-rich-and-poor

[6] https://www.oxfam.org.hk/tc/f/news_and_publication/16372/Oxfam_inequality%20report_Eng_FINAL.pdf

 

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