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Trade

Hong Kong was built on its free market, and business is not a zero-sum game

PUBLISHED : Thursday, 09 August, 2018, 6:30pm
UPDATED : Thursday, 09 August, 2018, 6:52pm

I was dismayed to read your first leader on Monday this week; not because of the subject matter but by the opening sentence (“Greater Bay Area offers a chance for tourism success”, August 6).

You wrote: “In the world of business, one person’s gain is another’s loss”. This statement betrays a worrying misunderstanding of how free markets work.

Perhaps you are confusing profit and loss with income and expense. It is certainly true that one person’s income is someone else’s expense. But a purchase in a free market is an exchange, not a loss. Each party to that free exchange gains, otherwise they would not enter into the transaction. By promoting this fundamental misunderstanding of markets to your readers, you suggest that business is a zero-sum game, like gambling at Happy Valley.

For over 170 years, Hong Kong people have been creating wealth through free market exchanges. Teaching the next generation that business has no net value is a low point indeed for Hong Kong.

Nick Sallnow-Smith, chairman, The Lion Rock Institute of Hong Kong

Don’t buy into Trumpian delusions on trade deficits

In the world of business, one person’s gain is another’s loss, so you say in your editorial of August 6.

But that is simply not true. If I buy an apple from you I have gained an apple and you have gained some money. We have both gained. And that’s so for the vast majority of trade and commerce.

This may seem a trivial quibble, but it’s the sort of dangerously wrong thinking that informs Trump’s tariff and trade shenanigans. He believes that trade is a zero-sum game: that America “loses” when it has a trade deficit of, say, US$500 billion. It doesn’t. Its citizens have US$500 billion worth of goods.

Trump rails against China during dinner with executives

Trump’s win-lose misconception leads him to think that tariffs are “good” and will lead to wealth. Again, false. Tariffs are a tax on Americans. There was a reason the world – at the urging of America, let’s recall – established the post-war General Agreement on Tariffs and Trade: to reduce tariffs, which increased world trade and world wealth.

I wouldn’t buy into the Trumpian delusion that trade is a bad thing unless you “win” with tariffs. That’s the same bunkum as “one person’s gain is another’s loss”.

Peter Forsythe, Discovery Bay