I recently came accross a passage in P.J. O’Rourke’s Eat the Rich where he described Hong Kong as an example of pure Laissez Faire capitalism. This was in 1997 after the handover from the British to the Communist Chinese. Is this accurate? If so, how is the hands-off approach enduring under Hong Kong’s special status as part of the PRC?
Wasn’t that in…'99 or '00? Certainly not '97.
It’s 1997 all right.
Back to the OP - I can attest first hand that laissez-faire is totally overrated. There’s this gaping chasm between the rich and the poor, and it is getting wider.
What you want is a perfectly competitive market, which can only be attained with government intervention.
You know what’s worse? The government actually works for the rich. Now it’s trying to jack up property prices. Sickening.
HK’s reputation for laissez-faire (attributable to Milton Friedman) is a gross exaggeration.
Nearly 50% of HK’s people live in publicly-owned or funded housing. Around 90-95% of all hospital treatment (in-patient) takes place in public hospitals. ALL the land is owned by the government, sold to others on a leasehold basis. Land-use policy is extremely inflexible.
This looks more like socialism than laissez-faire.
OTOH, taxes are low (15% max on salaries, 16% on company profits, zero on sales or capital gains) and no import tariffs. There is no anti-trust/pro-competition law, so cartels, price-fixing, etc are legal. Insider trading is illegal but not really much in practice.
So in some ways, the place is quite libertarian.
Since the 1997 handover, the government has shown signs of becoming more interventionist in a Singaporean way. The new leadership shows signs of thinking it can plan economic development. Thus we have the world’s first state-owned Disneyland. But, largely, government involvement in the economy remains roughly similar to pre-97. Government has grown bigger, but that’s partly a hangover from the expansion started under the pre-97 govt, which assumed the 1990s boom would continue forever and raised govt spending. public spending as a % of GDP went from 15% in 1993 (IIRC) to 24% today.
The trend away from laissez-fair is the subject of big complaints (especially from economists and the western business community). Local vested interests, notably property and financial tycoons, are happier, as it keeps the system rigged in their favor.
The gap between rich and poor mentioned by Urban Ranger looks bad. But it would look just as bad if you measured (say) Manhatten island. HK is increasingly part of a bigger economy - the Pearl River Delta - and some economic indicators for HK in isolation look increasingly weird as a result. HK’s “poor” are lower middle class Guangdong-ese on the wrong side of a line on a map. It all depends on what you measure.