Eight Questions: Leo Goodstadt, 'Poverty in the Midst of Affluence'

Hong Kong may be known as the city with the highest number of Rolls-Royces per capita. But behind its sleek malls and high-rises is a warren of subdivided flats, cage homes and more than a million people living in poverty—much of which can be traced to government policy, says economist Leo Goodstadt. In his new book, "Poverty in the Midst of Affluence: How Hong Kong Mismanaged Its Prosperity," Mr. Goodstadt argues that despite economic growth and an enviable 65 billion Hong Kong dollar (US$8.39 billion) budget surplus, living conditions for average families in the Asian financial hub have actually deteriorated.

China Real Time spoke with the author, who served as the head of Hong Kong's central policy unit from 1989 to 1997 and has authored several books on economic and political trends in Hong Kong and China. Edited excerpts:

Hong Kong has one of the developed world's widest wealth gaps. In your book, you argue the government has fueled it. What's happened?

In Hong Kong, we have the poor you get in almost any community—people who simply don't have enough money. They're unemployed, elderly and so on. We also have middle-class people who cannot cope unless there are public services that are available to them. And in the last 15-20 years, the government has changed their policies so that what used to be provided free or heavily subsidized is no longer.

If somebody has a serious illness, what was formerly for free they now have to pay for in whole or part. We've seen service queues grow longer. Waiting times for early-intervention educational programs for children who've got disabilities have gone up by 50% in the last five years. If you go back to 1991, roughly the same proportion of poor families in Hong Kong and those from the top 10% of income families went to university. By 2011, 13% of people from poor families went to universities, while 48% of top 10% income families went.

To Read the Full Story

Continue reading your article with
a WSJ membership

View Membership Options