The Great Divide released 04 Mar 16

Science Fiction

You might have read science fiction or watched movie that ordinary people are governed electronically all year round and an elite class enjoying special privileges. Read on.

The Four Indirect Causes

Aging – The baby boom has entered their middle age and beyond thus having to save both for retirement and children education thereby reducing aggregate demand of the whole society.

Globalization – This trend is not helping the middle class either and has marginalized many professionals whose expertise can be transferred overseas to reduce costs. The vicious circle continues as income from professionals decline, corporate profits decline too.

Technology – The tech trend ever since the personal PC invention was being popularized in the 1980s and continuous improvements in telecommunications such as mobile technology, fiber optics, broadband etc have contributed to less demand for manual or even professional labor.

911 – The incident has triggered losses of jobs and an era of low interest rates not seen for decades. Retirees and potential retirees are hit from all sides – unemployment as well as the lowering of returns from their investments.

The Pressure on Profits

All of the above contributed to lower demand thus fewer jobs and are putting pressure on profits for a large number of corporations. Those sizable enough are increasingly pursuing their profits from the inside track i.e. taking advantage of government. In doing so, government revenue is suppressed, contract costs increase and government in turn has to raise fees and/or taxes from the middle class.

Just to cite two examples – one in Hong Kong and one in the US.

Hong Kong – The sale of a few apartment blocks under the homeownership scheme to New World was meant to support the market. NW set to gain tremendously from the deal.

US – Many corporations linked to Dick Cheney got huge contracts during/after the Iraq war from the US government without going through the usual bidding process.

This is now happening here in Hong Kong and elsewhere in the world. A decent job is difficult to find while a host of senior civil servants or senior management from private sector are enriching themselves like never before thus creating The Great Divide.