In the parallel up-is-down psycho-world of anarchist 'economics' one can find such gems as the assertion that free market capitalism is not the foremost reason for Hong Kong's rapid move from universal subsistence to near-universal affluence from 1950 to 2000, by which point the country was wealthier per-capita than the UK. [1]
The basis for this case is two-fold; the government of Hong Kong owns title to almost all of the land within its borders and the LegCo members have a lot of cosy relationships with folks in business. On the face of it these seem very practical points. They are certainly both true, but there's something missing here.
On the first point, government control of land is a key factor in the absurdly high house prices in Hong Kong. Linda Yueh wrote for the BBC in January 2014 that house prices in Hong Kong averaged 13-times Hong Kongers' annual incomes. [2] In a similar vein Yvonne Liu commented in January 2014 on the city-state being ranked the most unaffordable place to live four years in a row. [3][4] In both instances it was rents and mortgages that were the bugbear, not the cost of anything else.
The LegCo subsidises many housing projects throughout Hong Kong. [5] This should be driving prices down, right? So why, when it is considered unsanitary for median real estate prices to exceed the median income by more than 3 times, does real estate reach 13 times that income?
This makes housing the weakest industry in Hong Kong in terms of outcomes for HKers. Why? There is plenty of un-developed land and building upwards decreases cost per unit of housing when building towers. Perhaps, lo and behold, the state is a bad manager of land. Wouldn't that be a revelation!
On the second count I have to ask; what businessfolk? Why financiers and property developers, of course! Considering the fact that all fiat currencies - including the Hong Kong Dollar - are issued by government central banks and that people connected to those banks will be the first to get ahold of newly created digital deposits, and that they will almost invariably spend those funds on the acquisition of land rights (actually buying land outright is problematic in Hong Kong, and so correspondingly rare) then the usual cycle of price inflation seen in every wealthy country today will play out in Hong Kong as well. [6]
In fact price inflation versus unequal access to newly created money is one of only two reasons there's any poverty left in Hong Kong, the other three Asian Tigers, and all OECD members. The first part of this post probably made obvious that the other factor is regulation of construction.
Hong Kong is thought of by historians and economists as one of the 'four Asian Tigers' alongside Singapore, South Korea and Taiwan. On that note, Hong Kong today is one of few rich places where the USD GDP is rated higher at PPP than at nominal exchange rates, 52k vs. 34k per capita, respectively. [7][8] That's some serious juice. Somebody earning 40% of that level is taking home 20k per annum. That's hardly the breadline if, for the sake of argument, rent and utilities total 1k USD per month.
Also we have a load of controls in this experiment, namely the Soviet Union, Cuba, Laos, North Korea, those impoverished nations that prevented entrepreneurial capitalism from arising on a large scale like pretty much all of Sub-Saharan Africa, mainland China, and India before the 90's. And what do they have to show for it? Well, nothing but piles of bodies, really.
The Economist publishes a delightful little ditty called the Crony Capitalism Index. [9] I was introduced, or reintroduced, I forget which, by a Reddit user who took me to task for suggesting that Hong Kong and Singapore are pretty much the most economically free places in the world. [10] I looked around for info on the matter and responded with the text in quotes below.
QED.... they are the only countries in the top ten of both lists.I wonder how Hong Kong's GDP compares to that of China.China = 10 trillion | HK = 300 billion | 10trn/300bn = 33.3rSo China's economy is equivalent to 33 HK's. Singapore's GDP is a little bit bigger of late than Hong Kong's. Both are home to considerably fewer people than London. So the Economist table is effectively including two cities in a list of countries.Oh, and I just realised that their criteria are literally anybody who makes a lot of money in any of a certain set of industries because cronyism in those industries is more likely... so it's not even measuring demonstrated cronyism, just proximity to the possibility of it.It certainly must happen. They didn't choose that set of industries for nothing. I acknowledge that, but...I also wonder how many of the cronies are in real-estate - the one state-dominated commercial industry in HK. And in answer HK boasts 18 real-estate tycoons compared to 29 in the whole US.
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[1] Anarchist FAQ at Anarchist Writers - Section C.12
http://anarchism.pageabode.com/afaq/secC12.html
[2] BBC News article by Linda Yueh entitled What Makes a Global Property Hotspot?
http://www.bbc.co.uk/news/business-25742539
[3] Hong Kong ranks world's no. 1 for 'most unaffordable' housing in South China Morning Post
http://www.scmp.com/property/hong-kong-china/article/1410730/hong-kong-ranks-worlds-no-1-most-unaffordable-housing
[4] Wikipedia article entitled Housing in Hong Kong
https://en.wikipedia.org/wiki/Housing_in_Hong_Kong
[5] Wikipedia article entitled Public housing in Hong Kong
https://en.wikipedia.org/wiki/Public_housing_in_Hong_Kong
http://www.tradingeconomics.com/hong-kong/indicators
[7] " " - Hong Kong GDP per capita (nominal)
http://www.tradingeconomics.com/hong-kong/gdp-per-capita
[8] " " - Hong Kong GDP per capita (purchasing power parity)
http://www.tradingeconomics.com/hong-kong/gdp-per-capita-ppp
[9] The Economist article entitled Planet Plutocrat
http://www.economist.com/news/international/21599041-countries-where-politically-connected-businessmen-are-most-likely-prosper-planet
[10] Reddit thread
https://www.reddit.com/r/CapitalismVSocialism/comments/4bt15r/capitalists_what_is_the_most_capitalist_nation/d1c7u17
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