This book follows two earlier contributions by the author but takes a very different tack. Unlike its predecessors, the focus here is not on how Hong Kong achieved economic success, but on how the fruits of that success have been squandered by years of poor social policy that have resulted in entrenched disadvantage and contributed to growing inequality. Leo Goodstadt is well placed to provide an insider's account of Hong Kong policy, having been the head of the government's Central Policy Unit (CPU) from 1989 to 1997. This book embodies the insights obtained over that period and reveals his obvious frustrations at decades of poor policy and lost opportunities (although why the CPU itself was not more influential warrants further examination).

The main constituents of this depressing but in many ways familiar tale are set out in the opening chapter: a government driven by ideological zeal and under pressure from big business to adopt a “business approach” that left its social policy under-developed and incapable of meeting the needs of those unable to participate economically: older people, people with a disability, new mainland immigrants and, increasingly, the unemployed and sole parents. These failures have been compounded by years of neglect of basic social services that have left many families unable to access needed health care, housing and residential services, or being forced to pay excessively for them. This class of “new poor” now faces a social security system that denies benefits to all but the most destitute and a service regime that is outdated and inadequate. (I am not convinced by the way, that there is much that is “new” about the poverty that exists today in Hong Kong, but that is a minor quibble). Although relatively few statistics are provided to support the arguments developed – a consequence of the absence of data rather than any failing on behalf of the author – one figure that stands out is that the level of social expenditure in Hong Kong in 2001 was the same as the OECD average in 1960. With such neglect allowed to continue for several decades, it is no surprise that a wide gulf has opened up between the economic and social fortunes of citizens.

The book documents policy failings in housing, where the errors and lack of consistency have been profound, in education, where a majority of primary schools still operated in 2000 on separate morning and afternoon split sessions, and in health care, where the bureaucracy blocked reforms because the requisite taxes would reduce the government's budgetary autonomy (p. 120). The (appalling mis-named) Comprehensive Social Security Assistance scheme provides only meagre support to those lucky enough to qualify – only one-in-five of the unemployed in 2012 and less than one-in-seven of those aged 60 and over. And this is at a time when IMF figures show that purchasing power parity GDP per capita in Hong Kong ranked seventh highest in the world – just below the level in the US and over 26 per cent above that in Sweden.

How did this situation develop and why was it tolerated by the Hong Kong public? Many answers are provided, although the author argues that “it was toxic policies that wreaked the most serious havoc” (p. 221). Of the other factors identified, the historical legacies inherited from British colonialism (through its influence on senior policy makers) and Chinese political interference (which gave added impetus to Hong Kong's entrepreneurial spirit as a means of differentiation) were also culpable. The Basic Law enacted after 1997 required the government to minimize taxes, constraining its ability to increase spending, and emphasized that economic conditions should take precedence over social needs when considering social reforms. Another culprit, already noted, is the power of business lobby groups and the willingness of governments to accede to their demands – most of which bestowed favours on business itself rather than seeking to improve the general good through increased competition. The relative ineffectiveness of key elements of civil society – the trade unions, the NGOs, public intellectuals and the media – have also played a role, although this is beginning to change as the scale of existing social problems becomes clearer. Another element is the adequate provision of data that, until recently, kept many of the worse of Hong Kong's social conditions out of the public's gaze. This allowed policy makers and politicians to propagate false claims about the calamitous effects of CSSA benefits on work incentives and the work ethic on which economic success was built. Better data is slowly being generated (as evidenced by the recent release of a comprehensive report on poverty by the Commission on Poverty) but Hong Kong is still a woeful laggard when it comes to releasing the data so that researchers and others in the community can put government claims to the test and explore alternative policy options. Progress is being made, but painfully slowly and this book illustrates the grave dangers associated with allowing that process to continue.