Wednesday, September 9, 2015
Hong Kong Is Not Really A Laissez-Faire Economy
The South China Morning Post writes that despite what America says about Hong Kong, it is in fact very heavily state-directed. They believe that the government also needs to play a bigger role in livelihood and welfare issues, and they argue that too much money and time is being spent on infrastructure and high-speed trains instead of the well-being people of their people
Currently, about 45% of housing was built by the Hong Kong government, and they spend approximately $74 billion a year on education, their largest government expenditure. They compare what they should be doing to Singapore's Central Provident Fund, which takes out 36% out of every person's wage.
To me, this discourages entrepreneurship, since it completely defunds it. Higher taxes on people of Singapore and Hong Kong discourages innovation and creativity, and problem solving is erased. However, government intervention should increase in Hong Kong, particularly in environmental concerns, since living conditions and air quality there are extremely low, and some of the worst in the world.
http://www.scmp.com/business/article/1856163/hong-kong-can-hardly-be-called-laissez-faire-economy
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2 comments:
Hong Kong is essentially a small rock south east of Chain. Going from hardly anything to an economic powerhouse in a few decades tells me that they did something right. During its time of rapid growth, the nation was characterized by British common law legal system, strong private property rights, honest judges, a non-corrupt civil service, very low tax rates, free trade and a minimal amount of economic regulation. With the vast number of tax receipts from entities in the nation, it makes sense that the government would have enough wealth to do all that is described in the article. If the key factors listed above got Hong Kong to the top, I would recommend that stay true to their roots.
Although Hong Kong has been known to be the world freest economy for the past 18 years, there may be underlying factors that question this. The government has started to introduced minimum wage and subsidiaries. Also, household incomes have barely increased in the past years, even with a good economy. Therefore, the government provides about 50% of public housing. Also, the government mainly relies on land sales tax for revenue. Furthermore, it seems that the government favors powerful property developers over the common people since the property developers are the ones that will be providing the money in the long run. These various factors may allow us to question the complete "freedom" of Hong Kong's economic system.
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