Thursday, April 24, 2014

Income Disparity: Don’t Monkey With It!

Numerous studies have shown that social disgruntlement is more associated with relative wealth inequality rather than its absolute level. Citizens of poor countries are generally happy so long as all people are relatively poor. It’s when thine neighbor becomes better off than thou that serious and chronic grumblings set in.
No video demonstrates this phenomenon better than the one above, starring two capuchin monkeys. To us humans, the difference between cucumbers and grapes may be trivial, but to this pair, the delta feels like that between a Mercedes and a Hyundai. Magnify that amplitude to that of corporate pay disparity in the modern world, and substitute pitchforks and Molotov cocktails for cucumber bits, and one can imagine consequences being more troubling than cute. Hey 1%, beware of flying vegetables.

Friday, April 18, 2014

The Price of Comfort – $400 per hour

A throne on high.

How much more would you pay to lie flat to sleep rather than recline back a few degrees? Or sip lukewarm generic champagne from a glass rather than ginger ale from a plastic cup? Or have a service provider obsequiously fawn over you rather than dismissively shove overcooked food in an aluminum box onto your fold-down table?
For an Asian traveler flying to a far-away destination such as London, New York or Toronto, the cost differential can be $7,000 or more ($2,000 for an economy seat vs. $9,000 for B-class. As for the price of a First Class seat, if you have to ask...). In normal circumstances, which excludes those times when you find yourself in a dentist chair or being stretched on a medieval rack, paying such a premium for up to sixteen hours of comfort would sound like sheer lunacy. However, getting a certain class of patrons (or more likely their employers) to pay up is the core business model that airlines have needed to execute to make money. And by and large, the most successful ones have been Asian, namely Singapore Airlines and Cathay Pacific. As reported in this riveting and amusing article in the New Yorker magazine, the process is more difficult than at first imagined, particularly given the safety constraints that need to be faced. The airlines have paid many millions to outside design firms to create ever more comfortable, ergonomic environments for their coveted premium customers. The illusion to be created is that those hours spent in an aluminum tube at 12,000 meters in the air and in the company of total strangers (mostly sane, but not all) can be a pretty damned memorable part of a trip and can keep the busy executives bright eyed and bushy tailed on the ground. It’s a helluva trick, though a pricy one.

Thursday, April 17, 2014

Bienvenue au Canada, les Riches Chinois!

Parlez-vous Francais?

Earlier this year, Canada closed an immigration provision - long popular with the wealthy Chinese - that allowed wealthy foreigners to “buy” their way into permanent residency in Canada. As previously reported in this blog, countries such as Portugal have tried to draw the attention of these well-heeled would-be residents left out in (or more literally, ‘of’) the cold. However, those still longing for the vast expanses of Canada need not fret – so long as they can passably speak French. According to this SCMP blog, a loophole exists that would allow applicants to apply for Canadian residency through Quebec. An unlimited number of approvals will be granted to those who can pass “an advanced intermediate level of French demonstrated by a standardised test”. Once settled in their new country, les immigrants nouveaux can then immediately resettle to a place such as Vancouver (also known more colloquially as “Hongcouver”) with a more familiar-sounding population.
Clever. And a side benefit? They’ll be able to properly pronounce many more of the wine labels that lay in their caves. A glass of Ducru-Beaucaillou, anyone?

Wednesday, April 16, 2014

Supporting Hong Kong’s Creative Industries – a Must-do

In this television spot on Hong Kong TVB Pearl's Money Magazine show, the Nothing Gained author discusses the need for Hong Kong’s government to use its bulging coffers to foster a long-horizon nurturing of the literary arts in Hong Kong. After all, without such creativity, societies can be advanced yet not civilized. Hey, Hong Kong: be the New York, not the Dubai.


Friday, April 4, 2014

Tipped Over the Edge

In Mapo, Seoul: a bridge to oblivion.

This New York Times editorial penned by novelist Kim Young-ha is the latest piece to highlight Korea’s alarmingly persistent epidemic of suicides. Korea’s suicide rate is the highest among OECD countries, accounting for 40 victims per day. Taking one’s life is the nation’s fourth-highest cause of death.
An old adage asserts that, in nature, there is strength in numbers. Ask any fish swimming with its school. While often true, the problem in a conformist society like Korea’s lies with those who don’t get counted. Korea is famously intolerant of both individualism and failure. Therefore, the consequences for those cast outside of social norms by economic hardship, academic failure, health issues, or jilted romance is tragically severe.
Over the centuries when the country’s citizenry fought against foreign invasion and poverty, a strong collective identity was necessary for survival. And during the go-go decades following the Korean War, there was sufficient progress – economic, spiritual, social – made to justify the ongoing subjugation of self and pluralism. Group-think was more than merely patriotic; it was good national policy. However, Korea has reached the level of maturity where fostering creativity takes on a much higher importance than before. In fact, it is a downright necessity. And creativity by definition is the celebration of the individual, the unique.
The notion of failure is hardly ever lauded per se anywhere; nevertheless, it needs to be accepted as a necessary by-product of acting courageously and attempting to forge ahead. Unfortunately for Korea, shame bears a huge emotional cost, much more so than the converse rewards of achieving success, which too often seems more like entitlement than aspiration. Until Koreans can accept that the bridge of life is forged with an alloy of both success and failure, their eyes will too often be diverted downwards as they cross, rather than looking ahead towards the other end of the span.

Friday, March 28, 2014

Golf Too Lowly? Try Polo.

Ultra-luxurious polo clubhouse. In Tianjin, China.

Polo has long been considered the sport of kings. Persian royalty invented it. Princes Harry and William play it. Ralph Lauren built a fortune selling its reflected glory on otherwise prosaic cotton T-shirts. So enough said.
Now, polo is fast becoming the pastime of choice for China’s most discerning citizens. Or so hopes Pan Sutong, Chairman of the Goldin group. If Donald Trump were reincarnated as a Chinese billionaire, he’d likely bear a striking resemblance to Mr. Pan. They both believe that the good life comes gushing out of gold-plated bathroom fixtures. They share a passion for promoting la dolce vita to the nouveau riche. They both believe that the recipe for savoir faire comes printed on the margins of $100 notes. For Mr. Pan, he has travelled a long career arc, starting with cornering the market for karaoke machines in China – that essential piece of electronic hardware in those ubiquitous entertainment clubs that host business deals and ill-reputed activities – to building a gated community near Tianjin, China that focuses on first class wines, luxury housing, and horses. In his mind, nothing depicts success more than the sight of equines chasing after a small wooden ball on a perfectly groomed patch of Kentucky bluegrass. It’s true in England. So it must be for China. And golf is soooo pre-Xi Jinping.   

Friday, March 21, 2014

Crony Nations

This fascinating chart was included in an article in The Economist that reports on the relative proportion of cronyism to wealth concentration in different countries. As shown, Asian nations fared poorly, accounting for seven out of the top ten places where wealth in crony sectors is highest relative to the overall economy. By way of definition, “cronyism” refers to sectors that rely on the doling out of scarce resources (e.g. land, natural resources, utilities, gambling licenses) to a few private interests by the government. The business model is more about extracting “rents” from the assets, rather than creating value through ideas or innovation. While governments are meant to regulate how much “rent” is charged to the public in order to ensure equitable pricing, it’s too easy to conclude that, due to inherent inefficiencies and outright corruption, the benefits have been heavily skewed towards the asset owners. In effect, the economic rents extracted from the market have been far higher than what a more free and fair market would normally dictate. 
When one thinks of cronyistic countries, certain names easily jump to mind – Russia, China, Indonesia, Philippines, Latin America, India. These places are resource rich and/or have strong governments that control almost every major facet of the economy. Most illuminating to this blogger is how Hong Kong and Singapore pop up in the top five, with Hong Kong out front by a country kilometer. The prominence of the two city states on the list is largely a result of the scarcity of land and the often-infuriating land policies that the governments have adopted that enrich property developers. However, particularly in the case of Hong Kong, there are stark and incontrovertible lessons about the inherently Darwinian nature of supposedly free economies to amplify the advantage of the strong over the weak. Close to 60% of total GDP in the hands of crony billionaires in a bastion of free enterprise?? The biggest surprise may be that such wealth concentration should not be a surprise.
One final note – why isn’t China ranked higher? Because the state itself is still the biggest crony. And the chart is not able to calculate and include pockets of hidden wealth that exist behind the thick, musty curtain of state ownership.