ABSTRACT
Chapter 4 shows that the effects of the lack of social mobility and increased inequality have been enlarged by local forces. The domestic economy is characterized by oligopolies, which have been first generated in the housing sector, and then extended in other sectors, such as utilities, transportation and supermarkets. These oligopolies generated economic rents and provoked an extreme concentration of capital, which further reinforced inequality. The pro-business attitude of the government, which is, and has always been, tactically shaped by the economic élites, has favoured this situation, which has also been nurtured by historical contingencies – e.g. the sales of assets by British firms which had decided to leave the territory before the handover.
The consequence is that the cost of housing has reached unbearable levels, while people have to pay extra for most of their daily necessities. Possible (and partial) solutions involved a reform of the tax system and/or the introduction of a competition law, but both have been missed opportunities. The Competition Ordinance, introduced in 2015, does not have any clause to prevent the existence of monopolies/oligopolies, while the abandoned tax reform did not aim to address inequality.
