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  • Aug 28, 2014
  • Updated: 12:25am

Freedom's just another word that's overused ... and don't you forget it

PUBLISHED : Sunday, 16 January, 2011, 12:00am
UPDATED : Sunday, 16 January, 2011, 12:00am

Hong Kong has been named as the world's freest economy for the 17th year running by a conservative American think tank.

SCMP, January 13

On the American political spectrum, 'conservative' of course means several light years to the right of Attila the Hun. To put the Heritage Foundation's latest freedom ratings in perspective, however, you need only know who came second and who was entirely omitted.

Second place, close behind Hong Kong, was the economy that has come closest to achieving communism in the classic Marxist sense of the word. Yes, Singapore was No 2. I hear you. Communist?

That's right. Sit Karl Marx down in Raffles Place any day of the week and he would say: 'See, I told you it could be done.' What other country in the world has ever come close to Singapore's high ratios of public ownership of property or the means of production? Certainly not communist Russia or even communist China.

But if you don't like communist Singapore, you can always try monarchist Singapore. The ruling dynasty certainly appears to be trying. What a wonderful fit for a right-wing American think tank.

And where was that place that was obviously missing from the top rankings. Nowhere on the list could I find Macau. But let's go down to the Heritage Foundation's criteria:

Business freedom - the ease of starting, operating and closing a business. It's no surprise that Hong Kong and Singapore score well here. They're both parasite economies, small city states feeding on the economic inefficiencies of their much larger neighbours. Their corporate frameworks accommodate this.

Trade freedom - a measure of the absence of tariff and non-tariff barriers. Refer to previous paragraph. When your host country makes trade difficult you feed on your host by making trade easy. It's straight from the parasitism textbook.

Fiscal freedom - the heaviness of the tax burden. It's not heavy at all when most fiscal revenue comes from indirect sources rather than taxes, as in Hong Kong. It's not heavy at all when government can tap 36 per cent of total personal income through a Central Provident Fund, as in Singapore. There are more ways than tax to skin a taxpayer.

Government spending - The scale of government spending as a percentage of gross domestic product. Ah, so easy. Just take your biggest spenders off the government's books and make them separate corporations. Half of Hong Kong's people and 85 per cent of Singapore's live in public housing. They are invisible to the Heritage Foundation.

Monetary freedom - inflation and price controls. The Singapore government owns the Singapore dollar (outright and don't you forget it) while the US Federal Reserve Board owns the Hong Kong dollar. Strictly this allows for no monetary freedom at all but the two economies naturally score high if you measure it by low inflation and the absence of price controls. To tap hot money don't clog your taps.

Investment freedom - no restraints on the flow of investment capital. Well, of course not. How can you be a parasite economy if you do not feed on your host?

Financial freedom - independence from government control and interference in the financial sector. Yes, things do get messy for parasites every now and then. But we don't want to have to call it theft or money laundering, do we? Let's not look at all and then we won't have to.

Property rights - The ability to accumulate private property with the protection of law. Exactly the point. The reason that host economies are host economies is, among other things, that their property rights are weak. Parasites prosper by doing what their host economies do not.

Freedom from corruption - Self- evident but, please, if you don't mind, we in Hong Kong and Singapore actually like corruption. It's how we get much of our cross-border capital inflows. If our host economies were clean of corruption we would have less to feed on. We don't look.

Labour freedom - Hey, whoa there, we're having none of this union business. Oh, sorry, you mean freedom to keep labour down and stomp on unions. Sign us up. Yes, freedom's just another word for nothing left to lose. That's Somalia, the freest country in the world, and we don't want it. The Heritage Foundation's freedoms are mostly the freedoms of some people to impose on others, which is, unfortunately, necessary to maintain an economic framework. Freedom is an overused word.

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