Kapok: Who is in charge?

Back in my student years, I wrote a short essay about the massive peasant demonstrations that took place in France in the 1960s, which started before the May 1968 social unrest: Common Agricultural Policy was just starting (1962); younger and more challenging famers’ unions were coming of age; and Charles De Gaulle, the tutelary figure who had given pride back to the French in 1940, had become the first-ever directly elected president in 1962, and yet he was getting old and his prestige was fast-eroding – political personnel, institutions and society were not in congruence anymore.
On the one hand, peasant demonstrations were pointing to a chasm between the demands of a significant part of the population who were confronted with a fast changing environment and disappointing answers given by a far too rigid domestic political establishment. On the other hand, these rallies were in effect strengthening the state as they considered public institutions as the necessary and exclusive intercessor, and this even when unloading rotten fruits and vegetables in the courtyards of the ‘préfectures,’ the symbols of the state in local administrative units. Challenging and yet legitimising!
What is presently happening with the Dore case in Macao and what occurred in May with the disgruntled construction workers taking to the streets to protect their rights are two instances of this tumultuous interplay between state, government policies, corporate practices and segments of the society being confronted with unfair situations. Not only are they revealing a lack of appropriate regulatory environment but also of a possible challenge to the legitimacy of the local state apparatus.
Both cases involve mainland workers or investors, and each time we were made aware of their pleas because the victims took their cases to the China Liaison Office.
In May, the number of people involved was in the hundreds and it lasted almost two weeks – images of disgruntled workers marching from Taipa and occupying the street in front of the Liaison Office were splashed across social networks as well as the pro-government and liberal Chinese press. At stake were large dismissals at several casino construction sites and claims of unpaid wages (up to seven months), and the realisation that with only one-month to settle their case, dismissed workers might be in for spoliation.
Lionel Leong, the secretary for economy and finance, had to step in heavily and openly state that instructions were being coordinated by his own secretariat as well as other administrative units, including the Human Resources Office and the Labor Affairs Bureau.
Still, one can wonder why disgruntled workers would turn to the Liaison Office. Could it be because they have more trust in the higher echelon of the Chinese state to protect them? Could it be because the labor laws are in Macao exclusively drafted by their employers? Or because these laws as they exist are conducive to many forms of discrimination?
Earlier this week, a handful of investors in the Dore junket who are not able to withdraw funds they placed with the company also ended up in front of the Liaison Office. Although there is a clear irony involved in these claimants concerns for the whereabouts of what they call their “hard-earned money”, the questions that arise are of the same nature. Why would they turn to the Liaison Office to protect their assets within the gaming sector? Could it be because the laws allow both the gaming operator – Wynn – and the gaming promoters to play dumb? Could it be because the regulator itself is in denial of the reality regarding the adequacy of the laws and the scale of money laundering that goes on unsanctioned? It was only last week that the legal advisor of the DICJ was recommending a mere Code of Ethics for junkets! Once again, Lionel Leong had to vehemently step in… only after.
In the end, legitimacy will be secured if the right tools and the right channels for mediation are put in place.

Published in Macau Daily Times, September 25th 2015

Kapok: The art of the meaningful

I am no economist, and yet I have enough interest in political economy to figure out when something is right or not. Such is the case with the dramatically loaded use of the word “austerity” by the government. Is it right – in both its rational and moral senses – to use the word “austerity”? And if it’s not, why use the word despite its dreadful adverse effects?
One can always blame translation. Should we translate 緊縮 (jinsuo) as “tightening” rather than “austerity”, which is better rendered by 撙節 (zunjie), that better conveys the notion of frugality? But then, jinsuo is also clearly used to express a “drastic” reduction, such as “credit crunch”, so it does not seem to be an overstretch to translate緊縮計劃 as “austerity plan”, and Macau Daily News indeed refers to 緊縮政策 when it describes “austerity policies” put in place in debt-ridden European countries.
When did we start talking about “austerity” for Macao? Back in June 2014 at the very start of the dwindling of the gaming industry? In December 2014 when the Budget Law for 2015 was passed? Nope.
Only in April 2015, precisely when the budget of the government was being re-examined and revised. At the time, a vaguely worried Chan Chak Mo, the president of the second permanent committee of the Legislative Assembly in charge of supervising public accounts, raised a pale orange flag to say that if monthly gross gaming revenues (GGR) fell below MOP17 billion then Macao could face a budget deficit by year-end. By his sophisticated calculation, MOP20 billion in GGR per month would total MOP240 billion for the year, and given the tax on gambling of 35%, that would in turn translate into MOP84 billion in government’s revenues… almost exactly the amount envisioned by the revision of the Budget Law in May!
Why the MOP17 billion threshold? Because then, we might really have a deficit – a “crisis” in Chan’s vocabulary – but no explanation (other revenues? actual execution of the budget?) was given regarding the MOP3 billion discrepancy. In the new Budget Law, prospective revenues were revised downward, from MOP154.7 to about MOP120 billion, but then expenses went up slightly (!), from MOP83.72 to MOP83.76 billion…
Ultimately, if need be, Chan revealed that expenditures could “easily” be cut across the board by 5%, without affecting social welfare-related spending or heavy investments. This is, albeit slightly pumped up regarding minor investments (-10%), what was announced on September 1st and Chief Executive Chui Sai On has confirmed that these cost-cutting measures were here to stay.
By any account, the seemingly resolute acts taken in the wake of the bad results of the first eight months of 2015 – we are now below the not-so-thin red line of MOP20 billion per month – do not equate to austerity, which is defined as a set of policies aiming at, by way of spending cuts or tax increases or a mix of both, the reduction of government budget deficits. In the case of Macao, this is an (inflated) “anticipated” deficit: we ran a surplus in 2014 and then we have more than MOP350 billion accumulated in fiscal reserve – not even impacted, so we are told, by the ongoing financial turmoil now affecting Shanghai and Shenzhen. Moreover, the government expects these cuts to save MOP1.4 billion, a mere 1.7% of the budgeted expenditures – so much for the rigor of the measures!
Finally, the Execution of the Budget is only 60% – if we rely on the 2013 figures as the most recent ones have yet to be examined by the Assembly – meaning the government spends, in any case, less than 2/3 of the money it said it would!
Taking a stand and publicly explaining what these spending cuts actually mean – the shy first steps in eliminating waste within public administration and restoring trust of the citizenry in its public service – can only benefit Lionel Leong. Resolutely and personally taking the lead in pushing through the ongoing revision of the new Budget Law framework, thus positioning himself as a manifest proponent of greater transparency and efficiency regarding public finances, might not hurt either.

Published in Macau Daily Times, September 11th 2015