Kapok: Look on the bright side

Contrary to many analysts and politicians, I don’t believe that the policy address delivered last week by our Chief Executive is the “worst ever”. Moreover, I simply refuse to side with the sneering scornful commentators who have been disparaging the wording of the address for its shallowness, unconvincing semantics and lack of specifics. Sure, just like every single year, the address reflects a lack of courage that derives from a subtle mix of personal equation—our less than charismatic leader—, a balancing act between vested interests—the “four families”, their many cronies and their concealed conflicts of interests—, and institutional design—the absence of any form of accountability that has been eroding the overall legitimacy of the whole system. Just like in years past, the address is rather short of breath when it comes to critically reviewing past achievements or lack thereof regarding the implementation of previous public policies, as if the usual process of “assess, continue, revise, substitute or stop” had absolutely no meaning in our land of milk and honey.
Despite all the free flow of renminbi, mistakes, blunders and more than baroque policy designs will ultimately engender problems that will become ever harder to disentangle—traffic and public transportation naturally spring to mind—or simply impossible to tackle due to lack of preparedness—imagine a SARS-like crisis in Macao given our 2.3 hospital beds per 1,000 residents, half the ratio of both Hong Kong and Taiwan. And here, I am not even factoring the apparent incapacity of several government departments to anticipate things to come and thus articulate a diagnosis somehow correlated with reality. Just looking into the execution of the budget for 2012, now examined in the second permanent committee of the Legislative Assembly, and in which government revenues stand at MOP145 billion and spending at MOP54 billion, one soon realizes how wrong the government had been in its prospective calculations back in November 2011 when the budget for 2012 was thought to reach revenues of MOP115 billion and spending of MOP77 billion, ultimately earning 26% more but spending 30% less! And then, on such a trivial question as home-ownership and just as Mr Chui was trying to justify the backseat position given to housing measures, both our top executive and his “grey eminence” Lao Pun Lap started quoting figures that seemed to contradict the statistics of the DSEC: do we have 82.3% of home-owners, as per the 2011 census, or 72.9% according to DSEC figures for 2006 (down from 76.7% in 2001)? And how come the trend has been inverted at a time of renewed speculation? And what is the actual relevance of that figure anyway when these concern households (not individuals) in which young people who already have jobs purposely stay longer with their parents and delay their entry into an unsympathetic real-estate market beginning a career?
Nevertheless, and in spite of all the shortcomings, this particular address is announcing a paradigm shift of some sort, one in which, for the first time ever, the “short-termism” of the whole exercise is being questioned: if not a vision yet, surely there is a wish to project the whole community in the future. This is reflected in the generic title of the address “Increasing global capacity and promoting sustainable development”, that somehow positions “well-being” and “standard of living”, the two dominant leitmotifs of the 2013 and 2012 addresses respectively, as a dependent variable of the capacity to cultivate “talents”, that is to prepare Macao’s residents to be competitive and more self-assured in an environment that is necessarily extroverted. Ultimately, the government seems to realize that by overemphasizing the traditional Weberian perspective of the “protective” father, it had been defaulting on its capacity to be a “nurturing” uncle.

Published in Macau Daily Times, November 22 2013

Kapok: Would be welfare state

For quite some time now there has been a staggering contrast between the capacity of Macao to generate an extraordinary amount of wealth and its inability to make good of that newly acquired affluence. The recurring symptom of that abysmal gap between riches and expenses has been felt by many in their day-to-day life: expectations regarding public services, whether directly operated by state agencies or conceded to private entities, and the promises of a “better quality of life” are increasingly and consistently frustrated. The execution of the 2012 government budget that is now under discussion in the second commission of the Legislative Assembly tells us that public accounts have managed to produce a surplus of a mind-blowing MOP90.9 billion! Should we really rejoice? 
If we look back at the 14 years passed since the handover, there has been no single year of public deficit. Surpluses have therefore been the rule, but starting in 2007 these excesses transformed into “mega surpluses”: that year alone, the public account surplus tripled compared to the previous year, reaching MOP30 billion, and government spending only reached 43% of government revenues. Five years later, in 2012, the surplus has again tripled and the government now spends only 37% of its revenues. 
By just adding up yearly surpluses, I came to realize that accumulated excesses since 2000 amounted to an astounding MOP343 billion, that means close to our 2012 GDP of MOP348 billion or more than six years of government expenditure at current level! As far as the report on the execution of the budget is concerned, financial reserves are indicated as being “only” in the amount of MOP100 billion (less than 30% of GDP and a bit less than two years government expenditures) at the end of 2012. 
If only part of the yearly surplus goes to the reserve (80% in 2012) and another part feeds the foreign exchange reserves (a total of MOP132 billion in 2012), one can then wonder why overall stocks are so low and whether the very lean profitability of such reserves really makes sense. Moreover, if financial reserves as a percentage of GDP appear to be well on par with Hong Kong, whereas Macao is supposed to have grown richer in relative terms, actual public spending is still lagging behind our neighboring SAR, where public expenditures now reach 20% of GDP against only 15.5% in Macao.
In the Index of Economic Freedom published yearly by the Heritage Foundation, an American conservative think-tank extremely free-market oriented, Hong Kong tops the list as the freest economy on the planet, followed by Singapore. Although I have strong reservations about the actual economic freedom of Hong Kong proper given that it is the one part in Asia that has made the word “tycoon” a household expression and brought to ultimate sophistication the oligopolistic nature of capitalism, it is nevertheless interesting to note that when it comes to macro-economic data, government expenditures as a percentage of GDP in Hong Kong and Singapore run higher than the tax burden as a percentage of GDP, whereas Macao, that ranks an honorable 26 in this index, clearly posts an inverted ratio: taxes as a percentage of GDP run at 34% in 2012, more than double the percentage of expenditures. 
If government expenditures are good for territories like Hong Kong and Singapore, why would not it be so for Macao? 
Furthermore, that inverted ratio between expenditures and taxation put Macao in a group of only four places in the world where such an imbalance exists, the three other places being Timor-Leste (166 in the ranking of 177 countries), Turkmenistan (169) and Eritrea (173), three countries characterized by widespread corruption, weak rule of law and crippled economic activity. Is that really fair to Macao? There is thus no doubt that the Macao government should spend more, but how and for what purposes should of course be opened to debate.

Published in Macau Daily Times, November 8 2013