The emperor has no clothes, but remains an emperor

emperor

Did you still remember Hans Christian Andersen? Or, to go a bit deeper, have you ever read his short story titled “The Emperor’s New Clothes”? If you have neither read his stories nor known this person’s name (I assume most of you have), I suggest that we spend some time (re)reading his works. The Emperor’s New Clothes, in particular, is a title I think is worth reading. Allow me to summarize his story in case you haven’t read it, although some guys in Wikipedia have already done the plot summary.

Once upon a time, there lived a king who made wearing the best outfits and costumes his primary quotidian activity. Caring not so much about the kingdom and the people, but rather his appearance, or a very thick sense of fashion. One day, two weavers came in, claiming that they could build the best costumes for the emperor. So fantastic, so amazing, so awesome the designs were, that these outfits could only be seen by people who are intelligent, smart, and ‘at least not stupid’. The ruler took the weavers’ words so seriously that he entrusted them the new outfits. Anyone who could not view the emperor’s new clothes would be labelled ‘gravely foolish’.

The emperor finally wore these new clothes, but his ministers – and other subordinates – were so fearful of facing the reality: the clothes were so seriously microscopic that the emperor, apparently, wore nothing at all. But the ministers were also afraid of losing their jobs, or even their statuses, so they had no choice, but to lavish the emperor with praises. There the emperor embarked on his own parade, where every citizen marched to watch the procession, himself almost completely naked. People already knew the fact that the emperor was wearing ‘nothing’, but out of fear of being labelled ‘gravely foolish’, or hopelessly stupid, they would rather keep themselves in silence. A young child screamed out, but the procession went on. The emperor ‘probably’ knew about this, but, anyway, after all, the ruler prevails.

Obviously, there was almost no such historical example of leaders posing themselves literally naked; the moral lesson of the story is there, but its resemblance echoes for the duration of human civilization. We have seen great, wise leaders, but we have also seen bad, horrible leaders throughout our lifetime. What I honestly worry about is when a society, despite having understood some negative traits associated with the latter, would still cling their hopes on these people. Or when there are swindlers in the weavers’ clothing who deliberately exploit and manipulate the situation in such a condition that we ‘seemingly have no choice’ but to praise the naked emperor, given our personal fear at face value. Oftentimes we wish we could be like those young folks, but most of the time, a lot of us did not. Many factors hinder us, and adults understand that the truth is more complicating than what children usually perceive (this story is intended for children, by the way, but adults should learn, too). Still, ironically, we are simply afraid of telling the truth, when the truth itself, obviously, is already out there – and even visible for most of us.

It doesn’t matter whether we live in democracies, hybrid regimes, or dictatorships, but it is simply the reality of human society that oftentimes we are led by persons who have achieved tremendous feats for the greater good, or by others who have implemented disastrous policies. In a democracy, we can elect a person who gave us universal health care, mandatory minimum wages, multiple peace deals, LGBT rights, etc; on the other, we also have the similar ability to elect a demagogue, an outright racist, a bigot, or even a sexual predator to power. In a dictatorship, there were ‘benevolent tyrants’ who have led decades of economic miracle before democratization occurred; simultaneously, there were also tyrants that left a country in shambles, civil wars, or constant civil disorders. There have also been leaders that constantly give certain communities ‘pork’, in exchange of constant support to the leaders regardless of whatever wrongdoing the leaders have committed, be it a massive corruption scandal, serious human rights violations, or probably, something like sexual abuses, ties to mobsters, or racialized threats towards other communities that may be deemed soft spots or convenient targets. Look at history – not just the last two days – and we can see numerous of such illustrations.

History has seen such ups and downs in human society, but the good thing is that when mindsets change, people can change, too. We can choose to be like any other adults watching the naked emperor’s procession – all the while lavishing our pretentious praises at the ruler, or we can respond like the young boy in the story, and if need be, amplify his voices.

After all, I would remain an optimist. Probably a cautious one.

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Why poverty occurs

poor-people

When I was small, I was frequently told by my parents to persevere, work hard, and not to be indolent. From the car windows, we often saw young folks in a range of ages – I guess between 5 and 20 – playing guitars on the street side or begging for money. Their bodies were covered in dirt, oftentimes with torn-down clothes, and messy hair. Sometimes, there would be old ladies or men, slowly knocking on the car windows when traffic happened, asking for some pity. Some displayed physical deformities, such as cataract-affected eyes, amputated limbs, or tumors with the size of a human face. “You often have this strong feeling that you want to help them, but sometimes it’s better to be safe than to be sorry,” that is the near-typical expression my parents told me. “When you help a person, their friends will follow suit. And we are also not legally allowed to hand in cash for beggars or street urchins. But where the heck is the government?”

Afterwards, they quipped this familiar line. “That’s why you need to work really hard so that you have a better future.”

And that is also where we build this familiar, generalized adage of correlating people being poor with people being lazy, or ‘not being hardworking enough’. The reality, however, is far more complicating and incomprehensible than the pattern appears on the surface.

I was forever grateful for my family – especially my parents – that my family was able to support my overseas education, and that I was able to study in HKUST, one of the world’s youngest and fastest-rising research universities. And truth be told, if you happen to study in Hong Kong, it is also one of the ‘best’ places in the world not only to learn business, finance, or investment banking, but also to study about poverty. Not studying about poverty as a university major or degree of specialization, but rather to allow us to compare and contrast the unprecedented wealth and income gaps in one of the world’s most globalized cities.

I participated in several community service activities organized by a university-led outreach program throughout Hong Kong, and there, I began to experience – and learn more – about the more ‘sophisticated’ picture of the reality of poverty. If what you perceive of Hong Kong is mostly about its glitzy skyscrapers, you have only seen ‘one-half’ of the reality; you need to come across its numerous dilapidated multi-storey buildings, mostly spread around Kowloon, in order to get the other half of the reality. Inside the buildings, the alleys separating the flats are extremely shallow that you can hardly switch over your body. For a space the size of my own bedroom (back in my hometown), I think there may be like 5-6 ultra-small flats within that ‘alley’.

To make matters worse, there are other ‘quirks’ that epitomize poverty in this city. Many people, mostly elders, live in cages, due to ‘exorbitant housing rents’. There are also people who live in very compressed conclaves between two storeys of a building, to the extent that they can no longer stand, but need to crawl in within these spaces. And I can tell you that they are not lazy, either; these people, aged in 60s, 70s, or even 80s, still continue to eke out a living – an uneasy living – by picking up cardboards across the streets, and selling them to any hawkers for a tiny amount of money. Sometimes, they work for like more than 10 hours a day in restaurants and cafes, serving dishes and/or cleaning tables. Others stand for hours in certain stations to hand out pamphlets or advertising newsletters to any passersby. I once observed an old lady – perhaps already in a mentally ill state – getting in an altercation with a shopping mall security guard because of her pamphlet-distributing activity that is considered ‘annoying’. She murmured to herself in an angry tone while handing out these papers, to the ignorance of the passersby.

It’s not only about the old people. There are also young folks who are already working for hours a day, all the while doing menial tasks. Cleaning up tables in campus restaurants, removing food trays, or mopping the floors. And these people are definitely not lazy, just to keep this thought in mind.

Gradually, there came this awareness that people are poor not necessarily because they are lazy. That’s why it matters to look at the wider circumstances that facilitate such condition. If our parents are themselves poor, there is also a certain degree of likelihood that we will be in the same condition, and inherit it to our children and beyond. That is where the dichotomy comes in: we must work hard to lift ourselves from this evil cycle. But again, the outcomes can be mixed: some of them manage to have their offspring lifting the families out of poverty through education and skills, but others remain in the cycle, or even become economically worse off.

Consider two families of janitors. Just because their occupation is to clean out toilets does not mean we can easily dismiss their potential, especially their dignity. Suppose one family works really hard to provide adequate support for their children’s education; it is possible for them to support these children to finish high school, it is also possible their children can get scholarships to study in some of the best institutions to complete a bachelor’s degree, and it is even possible that they can complete a PhD degree. At the same time, the other family also works similarly really hard, but their children dropped out of high school, and given their inadequate educational backgrounds, end up working in a similar occupation as their parents do.

There are many possible answers on why the outcomes diverge for these two families. It can be mindset. Their parents may frequently tell the children how important education is, and why hard work and achievement matters, but they can also tell the children to ‘forget education, your stomach matters more’. It can be the neighborhoods they are in as well. There may be schools or educational institutions near their vicinity that offer subsidized education and renewable merit-based scholarships, with fully motivated teachers and educators doing their best to educate these guys. But there can also be a neighborhood ridden with crimes, infested with drug abuse, suffering from dilapidated, under-funded schools, obesity, or deadly gang fights. It can also be generational. The similar neighborhood their children live in is no different from the setting where their parents used to live. It can also be due to government policies. There are governments that favor free education and free healthcare because their tenet is social justice, so their families would be pretty much already ‘covered’ under its social security framework. There are also authorities that fully believe in laissez-faire principles, ‘to each one’s own’; your social status is defined by your own making. There are also regimes whose only task is to win the next election by handing out cash and other favored packages to their constituencies. You don’t call it social security; it’s clientelism. It can also be due to countries’ level of socio-economic development. The chronicle of this janitor families changed because the country shifted from a Third World country to a high-income economy. And don’t forget other ‘empirically unexplainable factors’. You can call it luck, bad luck, or if you don’t believe in any of these, simply refer to them as random events, absurdities, what have you.

Let us term them ‘unexpected circumstances’. It could be possible that one of the family members suffers from a terminal illness, and it takes a huge amount of money for its medical treatment. Or that the company the parents are employed in needs to lay off some people, including the parents themselves. Or it can be that an accident befalls to one of the family members, forcing them to forfeit their savings for education to pay for the medical costs. Or that either one of the breadwinners or the other family members is either seriously incapacitated or killed in a gang fight, a robbery, or an attempted murder. Or that a systemic economic or financial crisis takes place and the family lost their savings value. Or that another party wins election and promises to roll back every social security measure to ‘ensure a healthy fiscal setting’. Or that the social security benefits are taken away by other already-middle-class families. Or because of automation. Or that the children struggle to find jobs despite their high school or educational backgrounds. And it could also be possible that the family either never encounters or never becomes seriously affected by any of such calamities.

The reality becomes even more difficult to accept when one reads Thomas Piketty’s Capital in the Twenty-First Century. Using years of research output and armed with arsenals of statistical figures, Piketty showed that since early 1970s, most of the world – particularly the Western world – has witnessed a U-shaped growth in inequality (instead of the inverted-U theorem as argued by Simon Kuznets), due largely to globalization, outsourcing of jobs to less developed countries, and more recently, disruptive technologies and artificial intelligence. He argued that in the last 40 years, the growth of capital income has surpassed that of labor income; the larger the capital-labor income gap is, the more unequal a society will be in the future.

How do we define capital income? It can be gains made through productivity improvement when companies invest in sophisticated machines that produce more and better. It can also be gains invested from our parents’ inherited wealth. It can also be home prices. It can also be universities’ endowments. What about labor income? It’s the salaries that we receive from the occupations we are doing. And whether you feel your aggregate labor income is growing or stagnating may depend on the location where you live. As shown by economist Branko Milanovic, the biggest ‘winners’ of globalization in the last three decades are middle class in emerging markets (led by China) and the elites in Western world, while the biggest ‘losers’ are the poorest people living in poor and developing countries, as well as the middle class in the Western world.

It becomes even more confusing when we look into two totally different things: poverty continues to decline, yet inequality continues to increase worldwide. The number of people living in extreme poverty has dropped from 1.8 billion in early 2000 to now around 800 million as of 2015, but the wealth concentration among the top 1% of the world’s population has surpassed 51% of the global wealth in the same period. Nobel Prize-winning economist Angus Deaton, in his book The Great Escape (released in the same year as Piketty’s book), argued that the reasoning may be that while many people escape poverty through expanded access to education, healthcare, and other public services, they are still struggling to enter into the middle class. That said, the poverty-reduction effort is a success, but that success is built on a fragile foundation. This may mean that should anything occur, and should these people be ‘unprepared’ of its repercussions, they may either fall back into poverty, or remain trapped in the low-income-but-not-poor-cycle for a very long time.

That said, the reality of poverty is more difficult to understand than normally assumed. I will not take much of the explanation here into direct conclusion, as more research needs to be worked out to better understand its peculiar nature. Still, I think policymakers need to embark on policy innovation, as the world today is dramatically different from the world in the past. Lastly, the ages-old recipe of ‘job creation’ (as politicians like to promise) or ‘poverty eradication’ (as these UN aficionados and/or bravados like to voice out) has sounded so hollow with the complicating realities of today, that we all need to silence ourselves and reconfigure the definition of this concept, one that we think is as simple as street urchins or beggars asking for money on the street side.