Thursday, April 12, 2012

Lessons in my laundry: Hong Kong edition


I do irregular (but extended) business travel. (It comes from living in Australia – when you travel it is usually more than a week.)

And so I find myself needing to wash and iron business shirts and press a suit. Nothing complicated – but strangely the price and procedure changes by country. In New York I usually stay in Brooklyn and my walk to the subway takes me past a Chinese laundry which is breathtakingly cheap – my bag usually costs under $12. That is about a quarter what I would pay in Sydney (which is an expensive city for almost everything) and a third London. Brooklyn seems cheaper than other US cities.

This low-cost laundry (clearly a benefit to me) is made possible by a near-sweatshop centralised Chinese laundry where (immigrant) workers work hard for what may or may not be minimum wage.

When I wrote a post about that I was criticised for daring to state the obvious about income inequality in the United States. It is a taboo topic. In my defence several readers noted that investment bankers regularly press their own shirts in London. I certainly do in Sydney.

When I stayed in a friend's house in Chicago I discovered much to my surprise they did not have an ironing board. I thought it worth a blog post. And whilst the underlying tone was that income inequality was not the finest attribute of a society I have to say it is not entirely a bad thing. The couple I stay with in Chicago are a monstrously successful husband and wife team with children. Very few married women with children pull that off in Sydney – and the reason was obvious. The wife's work life (high profile but only moderately remunerative) relied more than a little on the two nannies and the implied low-wage workers (such as the staff at the local laundry) who relieved her of the mundane house-work that fills many (mostly female) lives in Australia.

This was feminist achievement made possible by income inequality. But it was achievement at a very high level and the USA is better for it.

This trip I stayed at a friend's apartment in Hong Kong. Nice place – not huge – but half-way up the Mountain on Hong Kong Island with an expansive view of skyline (when you can see through the pollution).

I asked to borrow an ironing board. My friend said he could do better. He knocked at a small door past the closet next to the kitchen and out popped a Filipino house-keeper maybe 20 years his senior. She cheerfully laundered my clothes and left them neatly pressed. She also made me breakfast, cleaned up my dishes and made my bed when I went to work.

I made a point of trying to work out her story. She had been a migrant worker throughout her life – mostly in Hong Kong but also in Dubai (which she found harder). She was thinly educated but thought her children (who she had spent years away from) were better prepared than her. The reason for migrant work was to educate her children (though I know nothing about their prospects – the Philippines are not a highly functional place). Unlike Harry Potter she did not show any unhappiness in living in the “cupboard under the stairs”. Instead it was a step-up for her and (especially) for her family. And it was better than Dubai.

But it made me deeply uncomfortable. Migrant workers are a profoundly anti-democratic institution – they provide a class of very-low income people who don't vote. The ethos of democracy is something burnt into my consciousness. In this ethos we are “created” equal (and thus have an equal vote) and dint of luck and hard work (or coming from the right womb) produce inequalities (some deserved, some otherwise). But the vote (hopefully a secret ballot) is one of the great equalisers – and acts to create a more harmonious society (albeit one that will interfere with income distribution to some extent). The woman who cheerfully lived in the cupboard under the stairs challenged what I thought was right in the world.

But then I was in Hong Kong (that is China) and another low-wage worker who does not vote in China seems – well – somewhat irrelevant. And my world view was out of place. Moreover the woman's children were clearly better off for her migrant work. And the Philippines would be a true basket case without remittances.

And low-income workers are a gift to those who get to employ them. They make the Feminist achievements of my above-mentioned Chicago friends possible. They can free productive people to work on things that were productive.

And that was clearly the case for my friend – consciously trying to pick up additional commercial languages (think India), improve his computer processing skills (python) and read a book per week. His ambition to build himself into as fine a thinker (and with as many diversified mental models) as Charlie Munger. Human capital development made possible by the profoundly undemocratic institution of migrant work.

But that was not the only thing people do with their wealth in Hong Kong. Hong Kong Island has become a pastiche of office towers for financial businesses and shopping malls selling the global standard set of luxury goods. Interspersed amongst that are stylish but ultimately vacuous bars where you can get wasted in the time you would have otherwise spent ironing your clothes and doing the dishes. It is not far (just a subway) from Kowloon where you can experience the smells and sounds of Asia – but they joke on Hong Kong Island that you need your passport to go there.

This is a world very different to mine – with some amazingly productive people – their productivity made possible by the institutions of China. Interspersed amongst that the most dilettante hedonistic lifestyle of an elite who can think of nothing better to spend their loot on than Swiss watches and French Brandy.

Whatever: I am going to make a confession. I liked having someone launder my clothes and the stylish bars are very cool. Freeing up all that time to read an extra book per week – that would be very cool too.




John

35 comments:

Anonymous said...

Main issue for the maid is they are treated as a different class of citizen with a different visa. Not only the voting issue, but for example, they can't drive a car they haven't been registred for. Plus they can't have HK permanent residency after 7 years even if they are fighting this in court at the moment. I guess the good side, is, as they are legal, they got health insurance provided by employer, they are sur to be provided means to go back home at the end of their contract plus a relatively good legal protection against abusive employers.
Disclaimer: I'm a happy employer of a living-in maid

Anonymous said...

If vastly higher productivity for the most well off is coming at the expense of the least, the solution is staring us in the face: higher top marginal tax rates, redistributed downwards to compensate the losers above what they would earn under the lower-inequality regime. If this can't be made pareto-optimizing, then the inequality is zero-to-negative sum and plainly can't be justified.

(Obviously, there's the left-liberal argument to be reckoned with about staked ownership vs. the patronizing condescension of welfare liberalism, but making sure the neoliberal case is internally consistent is a prerequisite to the larger argument anyways)

Pamly said...

What's undemocratic about voting with your feet? The migrant voted against her badly governed country where her skills would be totally wasted.
And by emigrating, she augmented world's GDP.

The world would be a much richer place (and probably much more democratic) if labour were free to cross borders.

Anonymous said...

Agree with most, but those shops, they are not for Hong Kong people. They are for mainland tourist.
And the expat elite, you are talking about, are just a small fraction of the Hong Kong people. Most Hong Kong people are dual income families who need the maid to make a decent living possible, as it is hard to live on one income.

Anonymous said...

I never got the chance to note in your "US laundry" post that laundry is relatively expensive in Ukraine (around USD 10-12 for one pair of pants) but the average Ukrainian laundress is paid peanuts.

Not sure hoe that affects your thesis, except I would note that if ancient Athens was the most literate society in history, as they say, it was also a slave society.

Citizens had time to argue politics, attend symposia and think up philosophies at extended dorm-room bull sessions because there was an army of slaves, women and metics to do all the work.

David Merkel said...

There are better and worse places to be a migrant worker. When I lived in Philadelphia, a friend of mine married a Philippina. Beautiful woman. Smart. Why did she marry my friend who was neither?

Well, she was beautiful aside from a large cut in her upper lip received from refusing the sexual advances of her Saudi Arabian employer. My friend was honest, kind, a hard worker, who had been born with a mental impairment. She loves him; indirectly, he rescued her from being a migrant worker.

The USA is a funny place. I live on a street with Korean, Pakistani (they keep the women locked up while they drive cabs), Nigerian, Czech, and Chinese immigrants.

There are other odd bits of "diversity" like the Nepalese family who runs the local convenience store exceptionally well, and the incredible number of Indian, Korean, Chinese and Russian immigrants to our area. If I go to the large Asian market nearby, I quickly realize that I am no longer in the suburbs of Milwaukee that I grew up in. I'm the minority in this suburb of Baltimore.

For what it's worth...

Anonymous said...

Voting with your feet is democracy, as noted.

Secondly, there are unequal incomes because there is unequal intelligence, perseverance, ambition, discipline, education, study-habits, preferred career paths, and efficiency among workers.

Presuming a more 'equal' outcome is superior based on wildly different inputs is shockingly illogical.

This pinata of the left-wing ignores simple truths that if you
a) graduate from HS
b) don't have kids out of wedlock,
and
c) get *any* job
your odds of ever living in poverty in the US are vanishingly tiny.

As noted in many places, living a middle-class existence in the US is more like living like a King in most of the RoW [if not Zurich].

In 2005, the typical household defined as poor by the government had a car and air conditioning. For entertainment, the household had two color televisions, cable or satellite TV, a DVD player, and a VCR. If there were children, especially boys, in the home, the family had a game system, such as an Xbox or a PlayStation.

In the kitchen, the household had a refrigerator, an oven and stove, and a microwave. Other household conveniences included a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.

The home of the typical poor family was not overcrowded and was in good repair. In fact, the typical poor American had more living space than the average European. By its own report, the typical family was not hungry and had sufficient funds during the past year to meet all essential needs.

Source: Census, DoE, HUD

IF said...

There are obvious arbitrage opportunities: Can't Australia make a deal with Kim Jong Un? It would be solving problems for all parties. Wealthy Australian families would have nannies and housekeepers as described, Un could fill his rockets more regularly from remittances, and the former political prisoners should be happy as there are plenty of scraps to scavenge in any western kitchen. Why are markets so inefficient?

Anonymous said...

anon @ 3:14

Your masters will be pleased.

Not only did you ignore any anecdotal data presented in the post, you took it as an opportunity to launch off on a completely unrelated string of "facts".

You hate the poor and by your "logic" that must also mean immigrants, from anywhere, seeing as how that was the subject of the post.

To be very clear, what do any of your "facts" have to do with the post?

Anonymous said...

John, very interesting, but I think you didn’t go far enough.

Walk into any trading floor in Sydney. They are disproportionately populated by 40 year old men.

Walking into a trading floor in a more civilised country, and there is a much better mix of genders.

The difference?

Nannies.

One of the speakers at a recent ‘women in banking’ conference in Sydney identified both the lack of a nanny culture (which goes above and beyond just the financial implications) and the ability to pay these nannies as one of the major hurdled for women succeeding in finance in Australia.

The cost of an experienced nanny in Sydney is $21-$25 an hour (although it can be cheaper if you are happy to run the gauntlet of hiring a backpacker). An investment banker with a husband that has a similarly busy job (or is a single) needs a nanny for 11 hours a day. So we are talking $60k-$72k per annum, post tax.

Child care (8am drop off, 5pm pick up) isn’t actually helpful for advancing one’s career.

There is absolutely no support from the Government (actually the opposite, as one needs to work through various departments in order to arrange the nanny’s tax, superannuation and workers compensation insurance).

Nor is this cost of working tax deductible.

I guess I shouldn’t complain – as a 35 year old fund manager, it keeps the competition down…

Jacob said...

I get my laundry done at the local wash-and-fold in San Francisco and pay a significant premium for it, probably 2-3x what it would cost me to do in the coin-op machines in my apartment building. But the service saves me an hour or so a week, which I probably spend mostly reading this and similar blogs. I am very thankful to be able to afford the indulgence (that hour is worth much more to me than the cost) but try to recognize it for the luxury item that it is.

Anonymous said...

What happens if the immigrant can no longer work?

In the US, living too long is a major source of poverty for women, even those who did everything right along the way. I don't know if that is true in other places.

SiamTwin said...

Hope you gave her a nice tip for the extra work she did.

Anonymous said...

@Anonymous 3:14am
What a piece of self-satisfied claptrap. Your three little tips for avoiding poverty kinda missed the point that this post was about migrant workers, who didn't necessarily have US style opportunities. People can be as virtuous as possible and still be utterly poor if they were born in the wrong country. Migrant work helps alter this, but it doesn't completely offset the differences in outcome given effort.

As for inequality of outcomes mapping entirely to your list of personal virtues, I call shenanigans. Yes, grit, persistence in education and other qualities matter. But a thick-as-a-brick boy from a wealthy North Shore family, to make a Sydney reference, might well get into a good university on the back of a private school spoon-feeding... Um, education ... and make a nice living in a non managerial position in the finance sector. Meanwhile a smart, diligent kid born to the wrong parents (poor, indifferent, drug-addicted, whatever) will struggle to get to the same point.

Anonymous said...

As a recent arrival to Australia from Hong Kong, I can relate to this post on an intensely personal level. The lack of migrant workers available here has had a profoundly negative impact on my wife's quality of life(and therefore my levels of happiness!). In Hong Kong she was able to work out three times a week, get a job, spend time with friends and attend cooking and language classes and taking our child for swimming and craft lessons(our live-in maid taking care of 100% of domestic chores). In Australia her life has become almost entirely dominated by grocery shopping, house cleaning and child care. This leaves her tired and irritated in the evening, longing for her old ex-pat life and disinclined to get dressed up and head out for dinner dates as we used to do frequently in HK. Just as well really, as the babysitting costs here are eye-watering - again something the live-in maid did as part of her job description in HK. Without making any judgements about the moral and economic arguments around migrant workers, the simple fact is that for a professional couple with children moving from Asia to Australia, your standard of living takes a significant nose-dive.

Bryan Willman said...

And of course, if you are really well off from the right sort of work, then you don't even need to hire immigrants.

A rich software geek typically doesn't wear ironed clothes, and so a clothes washer and dryer do the whole chore. No need for a lady living near the laundry room.

Same well off person buys most things via the web.

So, in some cases, while increases in wealth make it easier to secure the services of other people, that same wealth can make it possible to do so with less contact, and without directly hiring anybody.

The kind in inequality you complain of at least creates jobs...

Anonymous said...

I think I'd like to have my laundry done too, and as an Australian I completely understand how you'd also feel a bit uncomfortable about it. Have a look at the attached column by Michael Sandel in the Atlantic, and ask yourself at what point you would draw the line. What part of society shouldn't we leave to market forces?

http://www.theatlantic.com/magazine/archive/2012/04/what-isn-8217-t-for-sale/8902/

John said...

John,

This is such a complicated subject. While achievement at state level and human capital development, both your friend and the maid's children, are made possible by this, we are never sure if the entire world is better off as a whole. For one thing, we can't be sure if those kids brought up without mothers won't do harm to the society and their families.

I don't know how to manage the trade-off.

quagmire vixen said...

Hey , I live in HK too. But another layer of truth of an expat high life being: Not a lot of them can survive the 7 year residency requirement to become a local resident , you can be terminated at no cause with discretionary severance pay and need to get out ASAP if you cannot get another job right away as your visa condition has been breached.

Anonymous said...

Singapore. Closer, cleaner, more civil (but barely). Certainly more democratic by some measures -- 40% of all residents voted (93% of eligible citizens), compared to 0.01% for Hong Kong. Productivity though... less so.

Anonymous said...

I'd suggest laundry prices are as much centered around demand as a cheap pool of labor. I say this having lived on the east of the US - where one can get drycleaning done in hours for next to nothing - and the west of the US where it costs more but overhead and labor often cost less. Demand however is far less (though rising in Silicone Valley as the unproductive classes take over). My experience of Oz has been far less of a demand for laundering as well a more ingrained DIY ethic.


Really though this post is about global labor market arbitrage (that's the way to phrase it so the USAns don't froth at the mouth, Income Inequality is the new Socialism) All of your examples successfully exploit differences in world labor markets; from personal experience the maintenance man at my Washington, DC apt complex was formerly an MD in Serbia. Such global imbalances will shrink and for quasi-independent groupings of any size (not a Singapore, Hong Kong or Switzerland) managing this is the task of the 21st century. There's little reason an American lawyer should make 10 or 100x his developing world contemporary other than luck and rent seeking.

Bob Schriver said...

While fairly affluent now, I'm grateful for collectivist institutions - land grant universities, Catholic schools, public schools, unions and social security that don't exist in third world countries - and that allow/allowed a small cadre of us poor folks to ascend the ladder. While it may be bias, I've argued that the ascent of the west over the last few hundred years had as much to do with "social investment" as capitalism. Unfettered capitalism gets you to a Morrocan soukh - to get Silicon Valley you need 50 years of government technology seed money (computers were all still paid for in one way or another by the government when I went to college) and a bunch of techno geeks educated at public expense. The analogy I attempt to draw is to equate classical economics to Newton's laws and game theory / social investments to modern physics.

Saby said...

Having lived in India, NYC, London, HK and back again to London, I can honestly say that having someone to take care of your chores is a great blessing, maybe not appreciated enough by those who haven't yet tasted it yet.
I get your points on democracy etc, but really it really adds value to society if you have a migrant worker to help you out. Your time is better used and her/his time is better used (what would she/he have done in Phillipines/Indonesia/etc ??). As I see it, it is a gain for both parties and hence a net gain for society.

The challenge for the govts is having the institutional framework to have both the benefit of having low migrant workers along with reduced cost (no social security or other govt costs associated with low cost labor) - which is the reason only the dictatorial city states (Dubai, Singapore, HK) can manage it. US is a different matter altogether.

And to be fair, the HK govt does provide subsidies to the lower end of society with lower transportation cost, electricity subsidies, excess tax paybacks etc - not all of which go to migrant workers, but at least it is something...

However, I think there is another reason this exists. If you are a (high value) expat and you didnt have all the low-cost help, why would you ever move to the city states. The value proposition just wont make sense. The govts realise that they have to offer quality of life (which means an institutional framework for importing low cost help easily) to get the high value workers to come. and so...

my $0.02

@quagmire vixen - not true. In HK, you can stay till your visa expires. first hand experience!

Aharon said...

As a Brooklynite, let me assure you that the full gamut of prices exist here, from semi-sweatshop Chinese laundries to "organic" cleaners who will swab out the bloodstains with free-range unicorn tears and feed you a cappuccino while they do it. By staying in Brooklyn and finding your drycleaner, you've illustrated all sorts of things about price signaling, etc.

I think you're exactly right that a well-developed, fairly unregulated economic environment (in which neither prices nor personnel qualifications are set, or excessively set) with high population density generates a profusion of choices which include lower prices. I'm amazed that people in Pittsburgh or Richmond often have to pay more for oranges than I do.

Anonymous said...

I live in Chicago and I DO have an ironing board.
I do however know a surprisingly large number of young singles and couples (<30yrs) that employ a nanny and/or housekeeper.
Very different to Oz.

Anonymous said...

John,
Your feelings of being uncomfortable with domestic migrant help will only last about a week.

CamMi Pham said...

The problem about maid in Asia, a lot of time they don't know how to wash something properly.My friend's maid destroyed his designer clothes.

Also not all the dry cleaners in Asia are good....another friend of mine found a hole on his shirt when he picked up his clothes. It was the most expensive shirt he has every bought. He wore it only one time.

Another point, if you want to save money don't dry cleaning everything. Most dry-clean-only clothes, you can hand wash. People just don't tell you it. Dry cleaning is not dry at all (a chemical bath). It is not good for you and your clothes.

I know you don't feel comfortable with maid. But I love them. not because I am a spoiled brat. But they make the house less quite. My parents were never home. They were always busy with their businesses. The maid was like a friend, a family member. Depend on the owner, in many cases, the maid would have a better life than if she stays in the village. She makes a lot more money to send home help raising her children....and it gives her the opportunity to live a better life.

Anonymous said...

John

you are confused. migrant workers are a profoundly democratic institution -- or maybe that's not the word that either you or I want to use here -- maybe "liberty" is -- when you don't like a place, you pick up and move -- that may not be a democracy, but it certainly is freedom. think about it.

Tuvaorbst said...

The maid and the expat are peoples at different stages of their personal and national economic development. What you see is just a snapshot of a moment in time and will not last for long. For example, the money the maid sends home will be invested in education and a better future for her kids, so that when they grow up they will have more choices than their mother. So that when YOUR kids grow up, they might not find any philipina maids left to employ. In economic speak, labour is priced in the free-market based on the maid's productivity and supply of labour, that capital the maid earns is reinvested to further increase productivity (her children's education) for a better future. Now if we can only get the central banks to stop debasing her hard won capital.

Anonymous said...

Why don't you just buy non-iron dress shirts? These are one of the great inventions of the past 20 years.

Anonymous said...

John,
And interesting post which challenged my view of income inequality too. I am always interested in working out ways to minimise the mundane tasks in order to maximise thinking time.

Sure, here in Australia we don't have an excess of migrant workers, but we will shortly have an excess of retirees who really can't afford to retire. And a young adult population who really can't afford to enter the real-estate market. I am seeing a lot of Gen-Y-ers staying at home a lot longer than what was the case even 10 years ago.

Perhaps a social contract of sorts could see multi-generation family-like units exist with the older generation taking on domestic duties while both members of the younger couple pursue careers?

But then again, I don't think I could cope with having the parents around constantly...

Rob Baker said...

Good God, man! Thank God you're back! I seriously thought something had happened to you since it was so long since your last post. Phew. Now I can relax in the knowledge that the coolest stock blog is still a rocking'...

Raja Panda said...

"consciously trying to pick up additional commercial languages (think India)"

I am totally lost on this one ? What does picking up additional commercial language have to do with India ?

Hope you clarify.

Regards
Raja

Anonymous said...

John, I will be visiting HK soon. Any bar recommendations?

nastol02 said...

This is such a complex topic. While success at condition stage and individual investment progression, both your companion and the maid's kids, are created possible by this, we are never sure if the globe is better off as a whole. For one thing, we can't be sure if those kids raised without moms won't do damage to the community and their loved ones.

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