Just How Free Is the World’s Freest Economy?
Democracy may pose the greatest danger to Hong Kong's free-market economy.


The public-transport system is largely privatized and self-sustaining (no eco-friendly but uneconomical subsidies). There is a measure of school choice. One public school I observed posted ads touting its attributes. If it fails to attract enough students, it will have to close. The constitution requires a balanced budget. And maybe most important of all, government spending is only 20 percent of national income. By contrast, the
U.S. government takes about 50 percent more than that; the average European government takes twice as much.

So what does the future hold? When the British turned
Hong Kong over to China in 1997, the great fear was that China would try to turn it into a Communist state. As part of an effort to forestall that outcome, the British left the country with institutions that would move in the direction of true democracy with universal suffrage.

In retrospect, the fear was completely misplaced. Capitalism in Hong Kong is in far greater danger from its own citizens than it is from anyone in Beijing.

Ironically, the biggest problem is: The people of
Hong Kong are just like us! They don’t understand free enterprise any more than Americans understand it. They are no more dedicated to it than we are. They do not think of free-market capitalism as a moral and ethical ideal any more than Americans or Europeans think of it that way.

True enough, people in
Hong Kong are aware that theirs has been named the freest economy in the world, and they are proud of that fact — even though capitalism was handed to them by a colonial government that no one in Hong Kong ever voted for. But from what I can tell, they would be perfectly willing to let it die a death of a thousand cuts — just as the rest of the developed world has done.

All signs point in the wrong direction. The government is about to impose
Hong Kong’s first minimum-wage law. It is pushing for expansion of the public sector in health care. And when the welfare cash allowances described above were reduced recently, almost all the members of the elected Legislative Council (which acts in an advisory role) protested the move.

The Chinese government has pledged universal suffrage in
Hong Kong by 2020. But is that really such a good idea? Right now, the most important bulwark against the creation of a welfare state in Hong Kong is the fact that the citizens cannot vote for it.

John C. Goodman is founder and president of the National Center for Policy Analysis.