call for universal pensions in Hong Kong

July 27th, 2014

Hong Kong’s promised march for transparency on age pensions took place last week, on Sunday, July 20th. An estimated 2,000 protestors took part. They called for release of a full report on pensions that government commissioned some time ago.

Hundreds of protesters, many of them in wheelchairs, yesterday urged the government to release a consultant’s report on a universal pension.

Nelson Chow Wing-sun, chair professor in social work and social administration at the University of Hong Kong, and his team spent a year on six proposals including a universal pension scheme.

The report, submitted to the Poverty Commission on June 30, is yet to be made public. ….

Organizers estimated 2,000 joined the more than hour-long rally from Chater Garden in Central to the Chief Executive’s Office in Tamar. Police put the crowd at 700. ….

If the government does not release the report and address calls for universal pension, the alliance [for universal pension] may organize another demonstration on November 16 – Senior Citizens Day – said Au Yeung Kwun-tung, the group’s general secretary.

One of the participants, Lo Siu-lan, 78, said she is fighting for future generations.

The oldest protester was a 98-year- old woman, surnamed Tsang.

Katherine Kwok, “Elderly in push over pension for all“, The Standard (Hong Kong), 21 July 2014.

The Alliance for Universal Pension wants all Hong Kong residents to receive a HK$3,000 (US$390) monthly pension from age 65. The pension could be financed by a 5% tax on payrolls, This would allow government to eliminate – or at least reduce – contributions to the Mandatory Provident Fund (MPF). The MPF consists of savings accounts that provide no pension, thus inadequate financial security even for those who contribute.

less work and later retirement

July 19th, 2014

We’ve got it all wrong, says Carlos Slim, the Mexican telecoms tycoon and world’s second-richest man: we should be working only three days a week. …. Instead of being able to retire at 50 or 60, he says, we should work until we are older – but take more time off as we do so.

“People are going to have to work for more years, until they are 70 or 75, and just work three days a week – perhaps 11 hours a day,” he told the conference [in Paraguay] ….

“With three work days a week, we would have more time to relax; for quality of life. Having four days [off] would be very important to generate new entertainment activities and other ways of being occupied.”

The 74-year-old self-made magnate believes that such a move would generate a healthier and more productive labour force, while tackling financial challenges linked to longevity. ….

Another of his deep-held beliefs is that education should be rethought. He told the conference … that it should “not be boring, but should be fun” and should teach people “not to memorise but to reason; not to domesticate but to train”. He also called for more vocational training.

Mr Slim, meanwhile, appears to have no plans to retire.

Jude Webber, “Carlos Slim calls for a three-day working week“, Financial Times, 19 July 2014.

This is an idea worth considering! Mr Slim has already begun to implement it in his Mexican telephone company. A collective trade union agreement allows employees with a sufficiently long work history “to retire before they are 50 [so] he has instituted a voluntary scheme allowing such workers to keep working, on full pay, but for only four days a week.”

what is GDP?

July 5th, 2014

Simon Kuznets, the Belarusian-American economist often credited with inventing GDP [gross domestic product] in the 1930s, had severe reservations about the concept right from the start.[British economist Diane] Coyle told me, “He did a lot of the spade work. But conceptually he wanted something different.” Kuznets had been asked by US president Franklin Delano Roosevelt to come up with an accurate picture of a post-crash America that was trapped in seemingly interminable recession. Roosevelt wanted to boost the economy through spending on public works. To justify his actions, he needed more than just snippets of information: freight-car loadings or the length of soup-kitchen lines. Kuznets’ calculations indicated that the economy had halved in size from 1929 to 1932. It was a far more solid basis on which to act.

When it came to data, Kuznets was meticulous. But what, precisely, should be measured? He was inclined to include only activities he believed contributed to society’s wellbeing. Why count things like spending on armaments, he reasoned, when war clearly detracted from human welfare? He also wanted to subtract advertising (useless), financial and speculative activities (dangerous) and government spending (tautological, since it was just recycled taxes). Presumably he wouldn’t have been thrilled with the idea that the more heroin consumed and prostitutes visited, the healthier an economy.

Kuznets lost his battle. Modern national income accounts include both arms sales and investment banking services. They don’t distinguish between social “goods” – say, spending on education – and social “bads” (or necessities) – say, gambling, repairing the damage after hurricane Katrina or preventing crime. (Countries without much crime miss out on related economic activity such as security guards and repairing broken windows.)

David Pilling, “Has GDP outgrown its use?“, Financial Times Magazine, 5 July 2014.

Mr Pilling is the FT Asia Editor. His article is long, well-written and very informative. Highly recommended!

Diane Coyle’s short (168-page) new book on the subject is titled GDP: A Brief But Affectionate History (Princeton University Press, 2014)

Hong Kong march for universal pension

July 5th, 2014

The Alliance for Universal Pension says it will hold a march later this month to call on the government to release the full report done by an academic on retirement protection methods.

Professor Nelson Chow, who was appointed by the government, has finished studying various pension scheme proposals and it will be made public soon.

But the Alliance said it was worried that the government will cover up controversial details in the report.

March for universal pension“, The Standard, 4 July 2014.

decision time in Hong Kong

July 1st, 2014

[G]overnment-appointed consultant Nelson Chow Wing-sun said he will bat for a universal pension to give retirees a more stable income in his report to be submitted to the government today.

“If the community misses this chance [for a universal pension], it will be hard to raise it again in future,” said Chow, chair professor of the University of Hong Kong’s social work and social administration department.

He said income taxes could be increased or higher regular contributions than the Mandatory Provident Fund could be made, which could lead to strong opposition from some sectors. ….

He reiterated that the pension is not to “subsidize the poor, but to ensure the retired can have stable income regardless of whether they are wealthy or poor.”

Earlier, Chow said the pension should not be less than the existing old age living allowance of HK$2,285 a month and that if it is accepted, it would replace both the “old age allowance” – that is HK$1,180 a month and non-means tested, [thus universal] and covers those aged 70 and over – and the [higher] “old age living allowance” that is means-tested and open to those over the age of 65.

In an interview with Sing Tao Daily, Secretary for Labour and Welfare Matthew Cheung Kin-chung said he hoped to release the report to the public.

But he admitted that it is “too early to decide” on the injection of funds by the government and implementation of the pension because “the community’s consensus over the contribution to the pension matters the most.” ….

Lawmaker Fernando Cheung Chiu- hung said he supported Chow’s proposal of having an old age pension because it can relieve the poverty problem among elderly, while the fruit money alone does not help maintain their livelihood.

He said not many apply for Comprehensive Social Security Assistance as “some elderly are afraid of the labeling effect if they rely on CSSA.”

Alliance for Universal Pension organizer Au Yeung Kwun-tung said the alliance agreed largely with Chow’s proposal but would like to know if the government will conduct a public consultation, or will just give a summary of the report.

Hilary Wong, “Now or never for pension scheme“, The Standard, 30 June 2014.

 

[Nelson] Chow, a social work specialist from the University of Hong Kong, said the key issue was whether the chosen plan could be funded – either by the government, employer and employee contributions, or through higher taxes.

“In the end, the Hong Kong people will have to decide whether they are willing to pay. If people are unwilling to pay, let’s not discuss this any more – let’s not waste our time; I don’t want to do these studies any more,” he told TVB’s On the Record yesterday.

He said a retirement protection scheme was not about getting the wealthy to subsidise the poor. “I don’t want to make calculations this way, but if you really want to calculate it, I just want to tell those making over HK$30,000 [US$3,870] a month that what you pay would not be subsidising the poor,” Chow said.

“In fact, I want to make this clear: this scheme would be to ensure that Hongkongers have a stable income when they reach the retirement age, no matter whether they are rich or poor.”

He added that the middle and upper classes would benefit most from the proposed universal scheme, in which all Hongkongers would be eligible for a flat-rate monthly pension from the age of 65.

Chow previously suggested those with assets over HK$10 million and civil servants on big pensions should not be eligible for the universal plan.

Lo Wei, “Crunch time for new pension plan“, South China Morning Post, 30 June 2014.

scmp_28dec06_ns_mpfa2_wck_2220_4473797.jpg
Professor Nelson Chow (South China Morning Post)

social pensions in Fiji

June 29th, 2014

An Information Ministry statement yesterday said the government had approved an increase in the monthly social pension currently paid to 9675 senior citizens.

The recipients of the social pension are 70 years and older, who do not have any form of income or pension or who have never been part of a superannuation scheme. ….

Social Welfare Minister Dr Jiko Luveni said  … “I am delighted to inform that Cabinet has approved the increase in Social Pension Scheme for the senior citizens from $30 [US$16]  to $50 [US$27] a month,” she said in the statement.

“So from next year, those who qualify for the social pension will receive $50 a month and currently there are more than 9000 beneficiaries and we expect this number to increase next year.

Avinesh Gopal, “Cabinet approves pension increase for elderly“, Fiji Times, 29 June 2014.

Fiji is an upper middle-income country with a population of 880,000 and per capita GDP of US$4,774. Its FJ$50 social pension is tiny, even by Fijian standards. Fiji’s minimum wage, in comparison, is FJ$2 per hour or at least FJ$90 a week. The minimum wage itself is less than the national poverty line, so leaves many working people in poverty.

Stiglitz on deregulation of oligopolies

June 28th, 2014

Corporate interests [after the second world war] argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.

But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation. ….

While Wall Street executives used their high-retainer lawyers to ensure that their ranks were not held accountable for the misdeeds that the crisis in 2008 so graphically revealed, the banks abused our legal system to foreclose on mortgages and evict people, some of whom did not even owe money.

Joseph E. Stiglitz, “Inequality Is Not Inevitable“, Opinionator, New York Times, 27 June 2014.

This is the last article in The Great Divide series, moderated by Joseph Stiglitz.

Columbia University economist Joseph Stiglitz (born 1943) shared the 2001 Nobel Memorial Prize in Economic Sciences with George Akerlof and Michael Spence “for their analyses of markets with asymmetric information”.

neoconservative mayhem

June 23rd, 2014

Although jingoism would bring Obama a higher rating in the opinion polls, his courage lies in not falling into this trap. People forget – thanks to the mayhem caused by the neo-cons – that Obama hardly has any options in Syria, Iraq or for that matter in Crimea, or at the best only risky ones.

MKC, commenting on Edward Luce, “America’s neocons have been jolted back to life“, Financial Times, 23 June 2014.

Another FT reader (“August”) writes “Haven’t you liberals done enough harm to the world? You keep supporting a complete idiot in foreign and domestic affairs, Mr. Obama, who isn’t an American in the strict sense of the term.”

August labels Mr Luce (a UK citizen, born 1968) as ‘liberal’, and describes President Obama (a US citizen, born 1961) as ‘non-American’ and ‘complete idiot’, but does not elaborate.

downtime for Tdj

June 19th, 2014

I will have limited internet access for the next 3-4 weeks. During this period, TdJ will be more like ‘thought de la semaine’. Normality should return towards the end of July.

Edmund Phelps at lunch with the FT

June 17th, 2014

Martin Wolf interviews Columbia University economist Edmund (Ned) Phelps. Mr Wolf’s report is peppered with comments that Phelps made during their long conversation. Here is a small sample.

“[To stimulate innovation] it’s necessary to start with a national conversation on the importance of creativity and discovery …. I’m not against a big government. I’d love to have colossal employment subsidies, to revolutionise the terms on which low-wage workers are employed, and, if there are some exciting initiatives that the government could take to open the way for more innovation, that would be great. But we’ve got to stop all this social protection. We’ve got to use that tax money for things like low-wage employment subsidies – subsidising work, subsidising innovation maybe, subsidising investment maybe.”

What about unemployment benefit? Medicare? “I’m not against social insurance. In my ideal world, wage rates would be so pulled up at the bottom by employment subsidies that everybody would be able to afford good levels of medical and retirement insurance in private markets. But we don’t live in that world. So, I would be loath to crusade against social insurance.”

I suggest that it is difficult to draw the line between the “social insurance” he favours and the “social protection” he condemns “Yes. We have got to protect the indigent. But social protection is out of control now.”

Wouldn’t he also accept that government can provide unemployment insurance and health insurance better than the private sector can?

“Yes, I understand there are flaws in private insurance markets. But the balance of advantage might have been in favour of private insurance if we had distributed the fruits of work more justly.” ….

Phelps believes passionately that creativity allows individuals to live fuller lives and remake the world. He is a true American, in a good way.

Martin Wolf, “Lunch with the FT: Edmund Phelps“, Financial Times, 14 June 2014.

Edmund Phelps (born 1933) won the 2006 Nobel Memorial Prize for “his analysis of inter-temporal tradeoffs in macroeconomic policy”. TdJ has highlighted aspects of his work on previous occasions, for example here, here, and here.