The city’s ballooning GDP is in stark contrast to the widespread reduction in the quality of life its population endures

In 1957, British Prime Minister Harold Macmillan told his supporters “let us be frank about it: most of our people have never had it so good”. More than 50 years later, his message would ring hollow for some and enjoy a resounding reaffirmation by others.

While the West languishes in the throes of a double-dip recession, multiple financial bailouts, economic blame-dumping, widespread unemployment, street riots and demonstrations, credit squeezes, and the tightest austerity measures for decades, Macau is experiencing a boom without interruption or hindrance.

It was announced that in 2009 the Macau government had a surplus of MOP23.8 billion (US$2.98 billion) or about 41.3 percent of total public revenue that year, rising to MOP41.88 billion last year. It seems the Macau government cannot spend money fast enough to keep up with its income.

Earlier this year it was reported that Macau’s per capita gross domestic product was the second highest in Asia last year, just behind Qatar, and that it was also in the world’s top ten. Last year, the city’s GDP increased by 26.4 percent year-on-year in real terms.

Middle squeezed

After a slowdown in 2009, Macau’s GDP growth has skyrocketed. In the first two quarters of this year, year-on-year growth in real GDP increased by 21.6 percent and 24.0 percent respectively.

The graph indicates the year-on-year rise in quarterly GDP in real terms since 2009. Clearly the increase is staggering. No double-dip recession there.

Lest we become too exuberant, consider the rest of the data in the graph. Based on the composite consumer price index, inflation is on the rise, from – 0.15 percent in the third quarter of 2009 to 5.24 percent in the second quarter of this year.

Household final consumption expenditure, which is a cost-of-living index, is also expanding at an increasing rate in real terms. From year-on-year growth of 0.8 percent in the third quarter of 2009, it jumped to 7.6 percent in the second quarter of this year.

This year, household expenditure for food, beverages and tobacco rose by 5.2 percent in real terms in the first quarter and by 6.7 percent in the second quarter.

The composite consumer price index for food and non-alcoholic beverages rose by 6.34 percent and 6.95 percent year-on-year for the first two quarters of the year.

At the same time, median monthly earnings increased from MOP8,500 in the third quarter of 2009 to MOP9,600 in the second quarter this year. This is a small increase that hardly seems able to match the recent rises in the cost of living and inflation.

Put simply, while GDP has soared – it has the steepest gradient of any of the lines on the graph – there seems to be little or no benefit for residents, who see inflation rising and real household expenditure increasing even more dramatically.

It costs more to live and your money buys less each month.

Nowhere, fast

While the government cannot spend its enormous income fast enough, Macau’s citizens are seeing their purchasing power decline and must spend more to keep pace with inflation.

It is a perfect example of the Red Queen Effect, an idea adopted from Lewis Carroll’s “Through the Looking Glass” by scientists to explain evolution. More specifically, it is the concept that you need to run faster just to keep pace or slow down and lag behind.

It is a concept that is not new to Macau; residents here have lived with this understanding for quite some time.

Maybe I’ve got it wrong, but I thought governments were here to help their people and ensure a uniformly decent standard of living.

Macau has a constipated government that hoards money, too readily tolerates unchecked price increases, offers only a few subsidies here and there when matters get too hot, and makes promises without any reference to time. Too little, too late.

While Macau is currently far more fortunate than many countries in the West, it strikes me that structural, redistributive justice seems to have gone missing. That may lead to a problem of even more social unrest boiling up.

In the same “you’ve never had it so good” speech, Mr Macmillan also said “what we need is restraint and commonsense – restraint in the demands we make and commonsense on how we spend our income”.

That seems like good advice. When might the Macau government act on it?

by Keith Morrison Author and educationist – kmorrison.iium@gmail.com