Bad economists should shut up or cease calling themselves economists
Free market in Hong Kong is more fragile then it seems after a multiyear deflation. No only government bureaucrats are mostly, if not all, Keynesian. Sociologists (Michael Degolyer, a case in point), political scientists (too many of them), and defunct economists (like the one I met yesterday in a panel discussion organized by the Democratic Party), are out there undoing what Hayek established over the past 70 years. Although Keynesian declared irrelevant in most economies, what ails us in Hong Kong was stupid defunct economist who did not know they are irrelevant, too.
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I was invited by the Democratic Party to be a speaker at a panel discussion yesterday on "Tax cut – Hong Kong Government Budget 06/07". The pleasant surprise was, the Democratic Party was both for cutting salary tax and cutting the government growth rate, in principle. On the discussion forum, there were also an accountant speaking on behalf of the vested interests of the protected industry, and the most importantly a defunct economist who is still living in the 60's when Keynesians rule.
The accountant tried to persuade the audience myriads of ideas to make the tax code more complicated. I am not surprised by this kind of self-interests politics. After all no one really understands what he was talking about, thus the damage is barely minimal. Although one thing does bother me – this gentleman asserted government should dump taxpayers' money to a totally nationalize West Kowloon Cultural District ("WKCD"), just to keep the politics out of it. I admire his sensitivity on the political aspect of the WKCD, I must say asking for more tax codes on one hand while supporting irresponsible spending on the other hand is at best stupidity. I am confident no one buys stupidity in this city.
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What keeps me awake last night was the defunct economist, who is also the President of the Hong Kong Economic Association [sic]. He said he was against any tax cut and he demanded more and more government money to be poured into the abysmal bureaucracy black hole.
He cited two specific cases – the tragedy of a man killed his wife who had sought help from both the police and social welfare department but declined; and a case which an English woman caught malaria mistreated by the Hospital Authority. Mr. Defunct Economist said both cases were results of government cutting funding. Excuse me?! Did I hear the President of the Hong Kong Economic Association say something unintelligent? I was shocked.
He went further and told the audience virtue of using land premiums to fund all sorts of bureaucratic machines. He also told the audience how much he admired another defunct economist Henry George and the idea of single tax on land to replace all other taxes. OH MY GOD! There is actually someone more "defunct" than Lord Keynes and his name is Henry!
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I was the third one to speak. I presented very briefly why money is best disposed by who actually own it. Then I told the audience why some libertarians think GST is ok, provided it does not leaves too many holes as exemptions. I told them, "When people realize they pay taxes, they are more critical on how the government uses money". I qualified my comment, "but the political realities in Hong Kong makes it impossible for GST without exemption. It will only be another revenue source paying by the very same group of middle income salary earners who is already paying taxes. Broadening the tax base is a lie, a shameless one. I challenge the Democratic Party if they dare to declare this further burden on the hardworking people a fair and just one". I am glad that no one talked about the issue of GST in this very forum anymore.
Then it came my barrage. I said, "Realizing the treasury holds our money is the first step to stop non-sense like more money into hospitals and social welfare". I bombarded with facts about the eightfold increase in healthcare spending and continuous expansion of the education bureaucracy, "What do we get after all these spending spree? DISAPPOINTMENT! Those who believe bureaucracy can create result (should shot themselves dead) are naive and superstitious". I thought the smart economist quieted the dumb economist.
No quite! Mr. Defunct Economist tried to make a came back! He said, "We should not assume too much. Young Mr. Lee assumes government spends irresponsibly and people like us spend smartly. Without coordination, how can market create something like the government does?"
Young Mr. Lee said, "I agree that we should no assume. WE SHOULD NOT ASSUME GOVERNMENT SPEND RESPONSIBLY. We the people might make mistaken, but we regret. Bureaucrats do not cry over spilled milk!"
I used the Hospital Authority as an example. I told the audience, "We have five clusters competing for resources. I must remain you. It is not market competition; it is bureaucratic competition. You know what happen? I f you are given a budget, you will definitely use it up! Because if you do not use up all the money given, you will not get them next year! Do you want how a cluster manager get more resources next year? Look at the waiting line! The longer the waiting line, the more likely you will get the extra money. So, what do you expect? LONGER WAITING LINE YEAR AFTER YEAR WITH MORE AND MORE MONEY SPENT!" I saw people nodding and even their mouths mumbling as if they try to answer my questions. It was very cool.
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I guess Mr. Defunct Economist would think, "This Young Mr. Lee is too extremist". Yes, I am an extremist. I AM EXTREMELY CORRECT! The floor asked questions about inflation, Bernanke and Greenspan. He talked shit about "Inflation Targeting" and I followed immediately said "Inflation target does not work. Firstly, there is a huge lag time in monetary policy. Secondly, CPI is a construct and it is very prone to bureaucratic manipulation. Also, cost push inflation is a totally baseless claim. Laws of demand and supply make it impossible for one commodity to create an inflation". I told them different compositions of CPI currently in place and what happened to be the position of Greenspan “preserving the purchasing power of dollar by means of a managed gold standard". Mr. Defunct Economist looked blank and said, "I don't know Greenspan supports gold standard”.
Yes, of course you do not know, moron. At the end of the day, what do you know? I doubt if you know shit.
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Another defunct economist John Maynard Keynes once said ironically, "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back."
This is the only thing I can reluctantly agree with Lord Keynes.
17 February, 2006
Oh! By the way, if you want to know who the defunct economist I am talking, his name is Ho Lok-sang. He teaches at Lingnan University, a failing school that need rescuing badly.
First Principle on Stupidity: Failures breed more failures. That's why history repeats itself.
Quotable from ferocious Lee not included above:
1. Do you think dumping more money into the habor render anything spectacular? Yes, only in Singapore where you will find artificial islets. This is no Singapore and you will see no shit after money dumped into the habor.