The American economist Milton Friedman famously praised Hong Kong as the freest market in the world.
In a 1980 television segment he rides the Star Ferry and enthuses how “the government is limited to its proper function and people are free to pursue their own objectives”. It is ironic therefore that 40 years later, it is United States government overreach that constrains his ideal of economic freedom.
Following the US’ Hong Kong Autonomy Act of July 2020, Hong Kong businesspeople are restricted from trading certain computers, aircraft components, technologies, software, and other controlled goods. Extraterritorial sanctions now also target individuals in Hong Kong and the Chinese mainland, in addition to many other countries. Changes to political rights are well publicized, especially when counter to Western interests. Restrictions on the right to trade, less so.
Manipulation of the right to free exchange is anathema to a global finance and business center like Hong Kong. Such external assault however is not the primary risk to Hong Kong’s prosperity, and it should not distract from the need to solve problems at home. The unchecked excesses of the market economy itself is the greater threat to stability and progress. It is eroding the fundamental rights to life for many citizens. The inaccessibility of adequate housing is only the most high-profile example.
For 25 years, Hong Kong occupied the top spot on the Heritage Foundation’s Index of Economic Freedom. Behind the scenes, the poverty rate quietly increased, exceeding 20 percent of the population in 2020, or 1.65 million people. The economic benefits of decades of growth were allowed to accumulate with a tiny elite class. Meanwhile, the perpetual monetization of land dragged the majority further behind, and the cost of living continued to soar.
Although dropped from the index following the introduction of the National Security Law for Hong Kong, and the resulting loss of the struggle for foreign influence, Hong Kong’s administrators nevertheless continue to be haunted by the legacy of Friedman’s outdated laissez-faire doctrine, and its local offspring known euphemistically as positive noninterventionism — more plainly, inaction.
Action is sorely needed. An acute example was the insufficient responsiveness to the COVID-19 “fifth wave”, resulting in patients unable to access hospitals when in urgent need. The “proper function” of government, far from remaining limited, is to respond to societal needs, and actively solve problems, through effective policy, legislation, and regulation. An estimated quarter of a million people live in subdivided flats that meet four out of five of the United Nations’ criteria for a slum. There are landlords who own these buildings. It is worth remembering that private enterprise has no right to profit in ways that harm society.
Beyond administration, the Hong Kong SAR government should seek to protect the public good, promote improved quality of life, and create the conditions for sustained, equitable, long-term prosperity for all. It must challenge the normalization of the world’s longest working hours, address the growing mental health crisis, and focus on supporting the youth who struggle to see options for career prospects and lack hope for the future. It must avoid at all costs the perilous path of free-market fundamentalism exemplified in the United States where the sick cannot afford healthcare and prisons have become profit centers.
Hong Kong residents deserve more from their government, and it has many assets that it can and should leverage to ensure long-term prosperity. Vast markets on the Chinese mainland are accessible to Hong Kong businesses. The youth who need broader horizons should be inspired and facilitated to go, spend time, and identify future careers or possible new ventures.
There are also opportunities associated with China’s “dual circulation” strategy and potential new markets in Belt and Road countries. The government should invest in large-scale educational campaigns about key regions and actively work to get the best and brightest involved.
Furthermore, the well-publicized future regions of the Northern Metropolis and East Lantau Metropolis can provide pilot zones for new solutions to persistent problems. Beyond commercial centers and premium residential development, land should be allocated to inclusive, affordable high-quality housing. Innovative, mixed-use approaches can bring together different strata of society, generations and ethnicities.
Emphasis should be given to ecological-based planning to integrate the built environment with existing natural systems and creating human-centric public spaces to enhance the social fabric, instead of maximizing revenues on saleable areas. Town centers should be pedestrianized to serve human well-being.
To unlock its undoubted potential, the government must effectively steward land use for public good, and not remain beholden to the interests of private developers, nor handcuffed by the vibrant village-level democracy (ironic in relation to the narrative behind US sanctions) that has historically blocked land resumption. All these would require determined government policy and action and cannot be accomplished by market forces alone.
In the vintage TV show with Milton Friedman, a group of artisans are described as some of the best-paid workers in Hong Kong at the time. They are shown carving up a massive ivory elephant tusk. To a contemporary audience who understand the brutality of killing wild elephants for decorative ornaments, it is widely considered offensive. Similarly, the societal damage caused by an unfettered, unmanaged free market is inappropriate and in need of reform. To remain passive is to be complicit in others’ suffering. It is time the government took pragmatic actions that address long-standing social inequities rather than continuing an overreliance on the free market to address the provision of public goods.
The author is managing director-global services at The Global Institute For Tomorrow (GIFT), an independent pan-Asian think tank with offices in Hong Kong and Kuala Lumpur. GIFT’s latest Hong Kong project is producing policy proposals to support a livable and resilient Northern Metropolis.
The views do not necessarily reflect those of China Daily.