Alex Lo
SCMP Columnist
My Take
by Alex Lo
My Take
by Alex Lo

Why the Heritage Foundation always gets Hong Kong wrong

  • The conservative US think tank knows the city has its troubles despite making it the world’s freest economy year after year; it just chooses to ignore them

It’s an annual ritual for many Hong Kong pundits to poke fun at the Heritage Foundation. This conservative American think tank has ranked our economy the world’s freest year after year for a quarter of a century now.

Most locals just shrug or roll their eyes, but it’s not that those foundation people are ill-informed; quite the opposite. They need a famous economy that can be presented as the way an economy ought to be, rather than the way it is.

Hong Kong, and to a lesser extent, Singapore, are two of the very few functioning advanced economies that suit the foundation’s right-wing agenda.

Hong Kong ranked world’s freest economy for 25th year in a row

Of course, our government officials and business leaders can’t be happier, though this year the foundation’s report does criticise Beijing’s alleged interference in the city and the decline in the rule of law. Despite a half-hearted protest from Chief Executive Carrie Lam Cheng Yuet-ngor, our elites have, once again, got the report card they want – low taxes, hands-off regulations, and anti-welfarism.

But as far as many locals are concerned, the foundation’s assessments are all wrong or have things upside down.

Don’t they know that high property prices and land costs are an indirect tax on the local population, serving as a wealth transfer to the government coffers and the big property developers and landlords from everyone else? Seen in this light, we are among the most taxed people on earth.

One reason people put up with high land prices for so long – but perhaps not any more – is because the government does function like a welfare state, while professing to be laissez-faire. At 16.5 per cent of current expenditure, social welfare is the second highest spending item on the government’s budget, after education, which is basically universal from kindergarten to secondary school, and university is heavily subsidised. Welfare spending almost tripled in 11 years.

Meanwhile, nine out of 10 people use public health care, which makes it pretty universal, too, while almost half the population live in public housing or subsidised-sale housing. Of course, all these services are now tearing at the seams, which explains why social discontent and political tensions have been rising.

Don’t the foundation’s bosses know all this? Of course, they do. But they are only interested in what Hong Kong looks like on the surface, not what lies underneath. They have looked under the bonnet and decided to ignore it.

This article appeared in the South China Morning Post print edition as: Why Heritage Foundation gets HK wrong