Free the People, Control the Government: A Lesson from Hong Kong

It is often believed that countries that are small are easy to govern. It is also believed that high population impedes economic development. There is one nation that shattered these popular beliefs… Hong Kong!

Hong Kong’s land area is merely 1,104 sq. kms and its per sq. km. population stands at 6,480. With this, Hong Kong finds itself in the list of the most densely populated states. To one’s sheer amazement, India and even China’s density of population is not even 10% that of Hong Kong. And despite this, Hong Kong has managed to create a league of its own. It has demolished the delusion that population explosion has led to the stagnation of economies in many Asian countries.

It is often debated that small countries, like Hong Kong and Singapore, can easily be governed to prosperity. If small translated to prosperous, former East Germany would have recorded significantly higher GDP growth than West Germany, since it was a fourth the size of its western neighbor. But this was not the case. North Korea is half the size of South Korea. Which country is more prosperous? If you accept the argument that small countries progress and bigger ones do not, then let that be a rationale for splitting India into 30 different states. Why do we bother about Punjab and Kashmir going their own way? But before you do that, remember that one of the most developed nations – USA – is bigger than India!

It is not a country’s size, but its government that makes a country excel. Freedom and Laissez Faire (no government interference) set the perfect backdrop for economic progress.

Taking the Example of Hong Kong

Hong Kong has illustrated that the allocation of resources can be the most efficient when left to the market forces. If people are left to their own devices, the economy has a greater chance of prospering. Yes, high growth rates of population, limited land area and lack of raw material resources can all be constraining factors. But, human ingenuity has the ability to overpower them all.

In 2009-2010, Hong Kong’s economy expanded briskly, with GDP growth accelerating to about 7%. Financial services, along with business and professional services, recorded commendable performances. Exports of services grew irrespective of the surge in offshore trade, financial market activities, and the continued expansion of inbound tourism.

Domestically, too, private consumption expenditure was high and better job prospects arose, which improved the financial position of households across the board. While construction and building enterprises saw a notable rebound, investment in machinery and equipment registered double-digit growth amidst growing business confidence. As a consequence, overall investment spending surged an impressive 11.1% in real terms.In 2011, Hong Kong was ranked the as the world’s freest economy for the 17th consecutive year by the Heritage Foundation’s annual ‘Index of Economic Freedom’, which covered 183 countries.

Hong Kong scored a rating of 89.7 in the index, which is way ahead of the world average of 59.7. Of the 10 parameters for economic freedom that were assessed, Hong Kong topped the list of financial and trade freedom, was second in investment property and freedom rights, and third in monetary and business freedom.

The Heritage Foundation further recognized Hong Kong’s potent fiscal management, due to which the city was able to weather the global economic downturn. The foundation complimented Hong Kong for its efficient legal and regulatory frameworks along with its openness to global commerce.

A Lesson for Everyone: Free the People; Control the Government!

The greater the controls and regulations, the greater are the restrictions and obstacles for business and the economy. This leads to greater corruption, shorter life expectancy and, worse still, lower quality of life. If there is something in life which can be termed as the most important, it has to be freedom. Every time the government legislates, every time it taxes, every time it grants monopoly privileges to its corporations or to individuals, it takes away our freedom. And this is what we can learn from Hong Kong, which has successfully proved all the naysayers wrong.

If a country wishes to regard its citizens as human beings, and strives to respect its people, it can follow only one system: laissez-faire capitalism. It is the only system which does not depend on the application of force. All other systems are those of tyranny, varying only as regards the amount of force.

In any free society, the government has to be controlled and it should not take any action except what is allowed. Its citizens must be consented to do whatever they wish, other than what is specifically prohibited to ensure that the rights of other individuals are not infringed. This is the only means of subordinating government to the will of the people, and making them aware of the fact that the government exists as the servant of the people. Its role is limited to the maintenance of law and order, the enforcement of individual rights, and protecting the country’s boundaries. Besides this, it just has no other part to play.