Bardonomics

Photo: SCMP Chief Executive Carrie Lam’s maiden policy address outlined a clear, if unsurprising, vision for Hong Kong’s economic future. The economic keystone of Ms. Lam’s policy address was, as expected, housing policy. Meeting housing needs was characterized as the “top priority” for the government. Beyond the dominant theme of housing, Ms. Lam’s economic proposals also included schemes to bolster the competitiveness of Hong Kong’s flagging innovation and technology sector and a reduction of the profits tax for small- and medium-sized enterprises.   Affordable housing has been a perennial issue for Hongkongers. The city is the world’s most expensive housing market, both in absolute terms and in relation to the median income of its residents. As a relatively small place, insufficient land supply is often cited as the root cause of Hong Kong’s high property prices. With its reputation as an intensely dense, urban city, it is also often forgotten that country parks compri...

Photo: Reuters/SCMP This year’s Nobel Prize in Economics was awarded to Richard Thaler, a University of Chicago economist who pioneered the pathbreaking field of behavioral economics—a discipline at the intersection of economics and psychology.   Economists have traditionally eschewed psychology in their models of human behavior, insisting that humans are fundamentally rational. That is to say much of mainstream economic theory is premised on the notion that humans systemically make choices leading to optimal self-benefit, and that all decisions we make can be defended on purely logical grounds.   This assumption has been problematic; many observable economic and behavioral phenomena sit uneasily with explanations grounded solely within the realm of rationality. Of course, the simple statement that humans are irrational does not provide much value to economics in and of itself: models cannot automatically incorporate the notion. For irrationality to be academical...

Image: Wikimedia Commons India’s taxman has a problem. Under three percent of the country’s citizens pay income tax, while the government continues to run a significant budget deficit. Bolstering tax collection thus assumes particular importance in the country. Prime Minister Narendra Modi’s widely criticised demonetisation program, which I wrote about in an earlier column piece, was to a great degree motivated by the aim of increasing tax revenue. The government points to the program as being responsible for a 12% increase in collection.   But with the vast majority of Indians working in the “informal” economy—typically small businesses, self-employment and other such enterprises that are chronically not tax compliant—and many more making too little to pay a meaningful sum of tax, the government has made a concerted effort to boost collection in other tax categories as well. India’s rapidly expanding real estate market has been a prime target. The government levies a sta...