Lion Rock 20, Hong Kong's labor welfarism and rising unemployment

Another good article from Bill Stacey, former Chairman of the Lion Rock Institute (LRI) in Hong Kong. He observes that labor welfarism policies intended to protect labor actually discourages the hiring of more labor, especially the less skilled and new entrants.
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The war against work

Bill Stacey

(Next Magazine, 2016/6/2, A002, Second Opinion,)

When I first arrived in Hong Kong in 1989, I had the impression of an incredibly dynamic work environment. Unemployment was negligible and workers of all kinds were in demand. Employers constantly complained that they could not keep staff as they bounced from opportunity to opportunity. People not earning enough to get by might move to a new job, but might also take on a second job. There were still families that would take on piece work in the home for extra income.

A look at the unemployment chart shows that this was a time when unemployment rates were just 1%.

All this has changed. The unemployment rate is now three times as high, but as this is only a fraction of the disaster caused by the sclerotic labor markets in many other countries, the government complacently pats itself on the back.

In reality, our labor market is increasingly stagnant and struggling to adapt to changes in the way people work and the structure of industry. A “war on work” is underway, which starting with an ideology that does not value work is prosecuted by union and academic foot soldiers who use the heavy artillery of legislative power to destroy jobs.

The first battle was over the Mandatory Provident Fund. Far from being a benefit for employees, the MPF confiscates some of their earnings and creates administrative complexity for employee and employer, leaving many a small business preferring not to take on the responsibility of employing anyone at all. Meanwhile, the MPFA’s empire-building mission has left our workers with little competitive choice to invest their hard earned retirement savings.

Minimum wage was the next attack. It was sold as protection for workers, but has simply served to eliminate jobs for less competitive workers and reduce opportunities for the young to get a step on the ladder of opportunity. It is not so much that opportunities are not available, but that small and entrepreneurial companies that offer more excitement than money can no longer get started. Minimum wage laws mandate unemployment for those whose labor is less productive.

Working hours are the new front. Although the government has dragged the process of review and consultations, we are moving toward legislation that requires overtime payments for work beyond an arbitrary number of hours. There is nothing wrong with contractual overtime payments, which can be a valuable incentive. However, the proposed government rules dramatically reduce flexibility. They require employers to keep detailed records of hours worked and make more difficult arrangements like working from home, where hours cannot be monitored. Standard working hours make life tougher for working mums, people combining work and study, and those who want flexible work arrangements.

These are new rules, but old prohibitions on work are being enforced with typical bureaucratic diligence. Occupational licensing is an old scourge protecting vested interests from competition. Who knew, until this week when we learned that a widow was prohibited from taking up her late husband’s shoe shining license, that you needed a licence to polish shoes? Every rule like this shuts down a job and an opportunity. Too many big companies are content to go along with more stringent workplace rules. If it is more expensive to hire workers and create new businesses, then there is less competition.

It is not just government that is undermining work and opportunity. The blithe indifference of some so-called localists to reducing tourists impacts job opportunities and undermines our community. There are ivory tower academics and dreamy futurists that envision a world without traditional work, where we are all guaranteed a taxpayer-financed “living wage”, and traditional work is all done by robots with artificial intelligence. This is a future without the personal autonomy and freedom that most of us want. It imposes on the working few the burden to pay for an idle many. Yet that is the future our government will create if it does not end its war on work and enterprise.

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See also: 
Lion Rock 17: Photos and Discussions in Reading Club Salon 2014, November 25, 2014 
Lion Rock 18, Nick Smith as new Chairman of LRI, April 05, 2016 
Lion Rock 19, Not enough capitalism in Hong Kong, May 12, 2016

Lion Rock 19, Not enough capitalism in Hong Kong

A good article by Bill Stacey, former Chairman of Lion Rock Institute (LRI) in Hong Kong. Reposting here.

Not enough capitalism!

(Next Magazine, 2016/5/5, A002, Second Opinion, Bill Stacey)

Hong Kong has many contentious public issues, but the underlying source of our discontent is fifteen years of stagnant real wages. For many in Hong Kong we are simply not progressing and the upward mobility from a dynamic economy seems absent. After decades of some of the strongest growth in the world, why has this stagnation happened？

It is all too easy to blame China and the emergence of labor competition, but this would be wrong. Low cost wages were a factor in China well before our stagnation. Wages have been rising rapidly in China recently. China has enhanced our productivity and allowed our higher value added industries to take root. It would be fashionable, but equally wrong, to blame inequality.The real cause of stagnant wages is insufficient capitalism. Capital is the life blood of the economy. When entrepreneurs figure out new products and better ways of delivering goods and services that customers want, they must invest in machinery, equipment, and intellectual property development. Those investments allow workers to be more productive. In the jargon of economists, as the “marginal productivity of labor” increases, the wages that can be paid go up.

Highly productive labor can strike a better bargain with better terms and conditions. Very valuable labor negotiates better pensions and working hours or more money as they wish. It is important to understand that it is not just the skills and education of working people that determine their productivity; it is the interaction between their efforts and the capital that their efforts command. If capital is inadequate, business models archaic, or entrepreneurial innovation insufficient, the talents and education of the population will not be enough to deliver rising incomes.Let us take for granted that our people are at least as talented, skilled, and well educated today as they were 30 years ago. What hampered wage growth is our capitalism that is increasingly tied in regulatory knots as compared to the past. Last year our private capital investment shrank by 8%, whilst public capital investment grew by 7%.As the accompanying chart shows, periods of wage growth were preceded by periods when our private capital investment was much higher than our public capital investment. It can take years for private investments to lead to the advanced businesses that allow wages to rise. Our wealth today is built on the entrepreneurial investment of the past. However, when public capital investment is high compared to private investment, then wages tend to stagnate.

This is the opposite of the story that we are told by officials. They will say that when the private sector is weak, the public sector needs to step in to make up for the slack so as to keep the economy on track. Many will even argue that massive public investment in infrastructure is a vital precondition for the private sector to grow.The trouble is that public investment does not deliver on its promise. It needs to be funded by taxes, so higher public investment leads to higher expected future taxes and less private investment. Public investment is more wasteful as it crowds out cost-effective private sector investment. Public projects are prioritized by political decisions, not markets, so they are often chosen to gain votes rather than profits. More importantly, periods of high public investment are often times when there is enthusiasm for more regulation and government interventions, which are inimical to entrepreneurial investment.Why is private capital investment so weak that it is not supporting the same productivity and wages growth that we generated in the past? Regulation is part of the picture. Long term investments require you to know the rules of the game. Stable rule of law is a precondition for strong private investment. Incentives are vital. If bidding for a government privilege or subsidy is more profitable than investing in better capital, investments will not be made. Too many of our entrepreneurs are on an Ayn Randesque strike, so wages will not rise and our discontent will not pass until we rebuild our capitalist foundations.

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See also: 
Lion Rock 16: 10th Anniversary of LRI, November 07, 2014 
Lion Rock 17: Photos and Discussions in Reading Club Salon 2014, November 25, 2014 
Lion Rock 18, Nick Smith as new Chairman of LRI, April 05, 2016

Lion Rock 18, Nick Smith as new Chairman of LRI

The Lion Rock Institute (LRI), Hong Kong's first and only independent free market think tank, has a new Chairman, Mr. Nick Sallnow-Smith. For 10 years, 2004-2014, LRI Chairman was Bill Stacey. Then in 2015, he changed job I think and he needed more time there, so LRI Exec. Dir. Peter Wong acted as interim Chairman in 2015 until March 2016.

Below is Nick's letter as posted in the LRI website.
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1 April 2016

A Message From Our New Chairman

Dear Lionrockers,

Despite the date, this is not an April fool’s message! Rather it is my means of expressing my pleasure today in saying a formal hello to all involved in the Institute.  I had the honour (with a ‘u’  for all you North Americans!)  of being asked, in our own “small circle” election, to take over today from Peter Wong as the Chairman of LRI.

It is a role I am happy to take up. The “Lion Rock spirit” in Hong Kong has been one of the key factors attracting me to stay in this city for the rest of my life. But it is a spirit which is at risk of damaging erosion.  For all of its modern history, our city has been an international role model for free enterprise and open markets. Hong Kong’s success has demonstrated to the world the value that these freedoms create for the whole community. That they could be questioned here of all places is astonishing, and is a challenge which we should not shirk.

We have a duty to speak up for the spirit of individual freedom and accountability that the Lion rock represents, so that new generations of Hong Kongers understand what made this city such a success, and realise that its loss could irreparably damage it.

For over 150 years politics were effectively “outsourced” to London. Free markets here were an economic issue. Today, they are also critical for personal freedom. The two cannot be separated. Without freedom to exchange, there can be no genuine personal freedom, and without the personal freedom to benefit from it, free trade means nothing.

I look forward to joining you in our own “free enterprise” collaboration at LRI aimed at standing up for these freedoms and explaining their fundamental value. This stand is increasingly important, as we face a growing global wave of collectivist fervour, which urges the denial of individual freedoms because they prevent those who would “socially engineer” our lives from doing so.

I hope to meet more of you over the coming months to share ideas on how we can be more effective in this mission.

Best wishes,

Nick Sallnow-Smith

Chairman

The Lion Rock Institute

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I have met Nick 3x in HK, during the LRI's Reading Club Salon 2012, 2013 and 2014. I attended those 3 events of small-group reading-discussion sessions, courtesy of LRI travel scholarship, along with Barun Mitra, Feng Xingyuan and Mao Shoulong. Our group photos on those 3 events in 2012, 2013 and 2014, respectively.

In the last photo, Nick is 2nd from left standing, Peter Wong is 4th from right standing, and Bill is in the center, seated.

Nick is British, been living and doing business in HK for decades. Soft-spoken guy, I can't imagine how he gets angry because he seems to be smiling often.

Congrats LRI for having Nick on the board.
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See also: 
Lion Rock 4: Leftism and Populism by Intellectuals, November 05, 2012 
Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013
Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014
Lion Rock 16: 10th Anniversary of LRI, November 07, 2014 
Lion Rock 17: Photos and Discussions in Reading Club Salon 2014, November 25, 2014

EFN Asia 56, Conference 2014 in Hong Kong, part 1

The following are minutes and proceedings during the Economic Freedom Network (EFN) Asia Conference 2014, Hong Kong, on the theme, “Liberalism: Promoting Growth, Reducing Inequality”, November 2014. Major sponsors were the Friedrich Naumann Foundation for Freedom (FNF), a liberal political foundation based in Germany, and the Lion Rock Institute (LRI), a free market think tank in Hong  Kong.

These notes were made by Karthik Chandra of the Foundation for Democratic Reforms, INDIA. The 25-pages notes are posted in

http://efnasia.org/wp-content/uploads/2015/10/EFN-Asia-2014-Conference-Report.pdf

I am reposting them by major segments and  installments, plus my brief personal notes on each segment. Here’s the 1^st installment.

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Day 1: November 6, 2014

Introduction to the EFN 2014 Conference by MC, Wan Saiful Wan Jan

Chief Executive, Institute for Democracy and Economic Affairs (IDEAS), Malaysia

Welcoming Remarks

Bill Stacey, Chairman, LRI

• Welcome to Hong Kong! Given the recent developments (citizens’ demands and mobilization) in Hong Kong (HK) serving as the backdrop, this certainly is a good and clearly an interesting time for all the participants to assemble in Hong Kong, especially to discuss about inequality, liberty and freedom.

• There is an image of HK in some quarters of the media that capitalism here is of the crony variety and that there is no true economic freedom or liberty for its citizens. But the reality is that for a city of 7 million population, there is a lot of economic freedom and enterprise.

• At the heart of the current political developments seems to be a vigorous debate about two freedoms – economic and political. But, there is no conflict between the two. Those institutions that ensure economic freedoms in the form of greater equality, growth, prosperity and overall economic freedom also underpin the political freedoms. A few such institutions are free flow of information and rule of law.

• ‘Liberalism’ as understood in the traditional sense should not be viewed as an end in itself. There is a difference between treating people equally and keeping/ensuring that they remain equal.

Siegfried Herzog

Regional Director, FNF, Southeast and East Asia

• Welcome to Hong Kong EFN Conference. EFN Asia Conference has become a long established tradition, this event being the sixteenth one; this is my first one as a Regional Director. Thanks to the LRI and the Frasier Institute for being our partners. LRI is also celebrating its 10th anniversary; congratulations to them.

• Events such as the EFN 2014 greatly help institutionalize the ideas, research, debates and international experiences help them become a part of the political and academic discourse on economic freedoms.

• This event is being held in the background of the furious debate over political and economic freedoms of HK vis-a-vis China. HK has long served as the global leader of economic freedom. Now, the debate is about its political freedoms; about ensuring the rule of law and independence from political interference in HK.

• Currently, there is also a great debate on economic inequality. The idea of ‘economic equality’ retains a lot of appeal despite the fact that communism and socialism have repeatedly failed to ensure the same, based on our experiences in several countries.

• At the same time, this debate also touches upon the issue of social mobility and how crony capitalists and well-connected gamers have managed to subvert economic institutions and thereby gain undue benefits.

• This conference therefore is a valuable contribution towards helping settle the above debate because it provides a platform for sharing of knowledge and bringing new ideas into an area that has been traditionally dominated by left-leaning thinkers or misguided activists.

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Me: Right, the (classical) liberal definition of equality is equality before the law, equal  application of the law to unequal people, equality in access to opportunities with no exception or people giving exemptions. And inequality of outcome, of income and assets ownership, is the natural result because people have different attitudes in life. 

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See also:
EFN Asia 43: Day 1 of Conference 2014, November 06, 2014
EFN Asia 53, Successful Conference 2015 has ended, November 25, 2015 
EFN Asia 54, On Hong Kong and China, free trade and CEPA, January 27, 2016 
EFN Asia 55, Presentation by Tom Palmer in Bhutan 2015, February 03, 2016

Lion Rock 16: 10th Anniversary of LRI

The Lion Rock Institute (LRI) held a great dinner gala last night here at Harbour Grand Hong Kong to celebrate its 10th anniversary. It was a fantastic event -- celebration of its 10 years existence, fellowship with LRI's major sponsors and donors, a fund-raising activity through the "Silent Auction", and networking with EFN 2014 conference participants. All in one night.

Below, the key personalities from left to right: Fred McMahon of Fraser Institute (Canada) who presented the result of the Economic Freedom of the World (EFW) 2014 Report; John Tsang, HK's Finance Secretary who gave the Keynote Address; Bill Stacey, Chairman of LRI; Siggi Herzog, FNF Regional Director for East and Southeast Asia; and Andrew Work, LRI co-founder and MC for the night.

VIP table below, from left: Nick Salnow-Smith of LINK publications, and has been a friend for three years now, we participated in the LRI's Reading Club Salon 2012, 2013 and 2014. He looks like Tony Blair but unlike Mr. Blair, Nick is soft spoken and very liberal/libertarian. Beside Nick is the head of CLP, a big energy company in HK (power generation, distribution, Kowloon area), Bill, John and Siggi.

Fred presented the EFW 2014 Report where HK, for the nth time, remains in #1 spot, followed by Singapore #2 and New Zealand #3. With regards to the on-going protests in HK, Fred showed a chart where HK's economic freedom score is very high compared to its rule of law score. Nonetheless, HK's rule of law score is higher compared to world average, and much higher compared to China's rule of law score.

Andrew Work mentioned during the program that LRI was started by "three crazy guys", Andrew Pak Man Shuen (left), Simon Lee (middle) and himself, in early 2004. Yes, I met Andrew Work at Larry Reed's Mackinac Leadership Conference in Michigan, USA in April 2004. LRI could be 1-3 months old then while Minimal Government, informally organized then, was only one month old.

I have a photo with Andrew W, Parth Shah and Barun Mitra last night, waiting for that photo. Andrew, Parth and I were batchmates at the Mackinac Conference for three days. Our other Asian batchmates that time have dropped out from the free market movement one by one. After Michigan, we went to Chicago to attend the Atlas Liberty Forum and that's where I also met Barun for the first time.

Among the highlights of the night was the presentation of LRI's student interns. A youtube video clip was shown how the interns have argued at the HK Legislative Council (LEGCO) opposing certain proposals like more (and endless) subsidies to certain sectors, wage control, etc.

From left (?? means I don't know them): Simon Lee, Andrew Shuen, ??, ??, ??, Kellie Wong, Janice Fung, Jude Law, Bill Stacey, Peter Wong (LRI Exec. Dir.), Raymond Ho (Momentum 107 convenor and LRI friend), Andrew Work, and Wilson Li, LRI staff. Not in the photo is another intern, Laurence Milton Pak.

I met Janice and Jude during the 1st Reading Club Salon 2012, held at Harbour Plaza at the New Territories. They were the two interns who helped organized the event.

Salute to LRI and its founders and officers.  10 more years, and more.
All photos above from LRI guys' fb walls, including Jadranco Brkic. Thanks.
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See also 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014

EFN Asia 43: Day 1 of Conference 2014

The Economic Freedom Network (EFN) Asia 2014 Conference started today at the Harbour Grand Hong Kong. Nice venue, great forum with great speakers, and many participants from Asian countries, from the US, Canada and Germany. The event is jointly sponsored by the Lion Rock Institute (LRI) in HK, EFN Asia in Bangkok, and the Friedrich Naumann Foundation for Freedom (FNF) in Berlin Potsdam, Germany.

Opening and Welcome Addresses were given by Bill Stacey, Chairman of LRI, and Siegfried "Siggi" Herzog, the new FNF Regional Director for East and Southeast Asia. Below, Siggi giving the welcome message.

The MC for the day was Wan Saiful Wan Jan of IDEAS Malaysia. From the Philippines, there are five of us here -- Dr. Vic Abola of  the Philippine Economic Society (PES), Tony Abad and Rhea Lyn Dealca of the Foundation  for Economic Freedom (FEF), Narwin Espiritu of FNF Manila, and me. FNF Philippines Country Director Jules Maaten arrived late today as there are a number of FNF activities in Manila until yesterday.

Dr. Razeen Sally delivered the Keynote Address, "Capitalism in Asia: Economic Growth and Inequality". Very articulate and clear defense of capitalism or market economy, innovation, competition, mass production and rising standard of living of the people in many parts of the planet. He concluded his speech with good and bad news.

The good news is that the world and its people today are much wealthier, healthier, higher economic freedom, mature institutions, compared to the people a century or many decades ago. The bad news is that governments almost anywhere are getting more interventionist and bureaucratic, often with no distinction between macro and micro, meaning even micro (community, firm, household and individual) levels are being monitored and regulated (micro-management).

Two distinguished reactors followed. Parth Shah of the Center for Civil Society (India) and Choi Byung-il of Ewha Woman's University (S. Korea) gave their thoughts on the subject of growth and inequality, while LRI Chairman Bill Stacey (middle in this photo) was the moderator.

I met a number of old friends whom I met last time about four or five years ago. Like Neena Moorjani, now with the Asian Trade Center in Singapore, andArpita Nepal of Samriddhi-Prosperity Foundation  in Kathmandu. Below, a group photo of participants from South Asia (India, Pakistan, Bangladesh, Sri Lanka,...)

The next round was the "Asian Cafe". Participants moved around in 5 groups representing 5 Asian economies and a resource speaker from each country gives a brief discussion about their country and the state of growth and inequality there. Here, Peter Wong (right, facing the audience), Exec. Director of LRI, spoke about HK. Many of the questions were about the protests by the "Umbrella Movement" or "Occupy Central" movement.

The last panel in the afternoon was about "Property Rights and Equality". Below, Lorenzo Montanari of the Property Rights Alliance (PRA) and Americans for Tax Reforms (ATR) in Washington DC, briefly discussed about the result of the International Property Rights Index (IPRI) 2014 Report.

The panel moderator and speakers in that session were, from left: Ken Schooland of Hawaii Pacific University, Andrew Work, co-founder of LRI and currendly editor-in-chief of the Harbour Times, Barun Mitra of Liberty Institute in  India, Michael Feng of CASS/Unirule Insitute in China, and Thitinan Prongsudhirak of the Institute of Security and International Studies in Thailand.

Many insightful ideas from the four speakers. We adjourned about 4pm, and we go back at 6pm for the cocktails and later, dinner program. Fred McMahon of Fraser Institute (Canada) will discuss the result of the Economic Freedom  of the World (EFW) 2014 Report. Then HK's Finance Secretary John Tsang will give a Keynote Address during dinner.

An after dinner program will be held in  honor of LRI's 10th Anniversary.
Photo credits -- from Jadranko Brkic, FNF S and SE Asia, Olaf Kellerhoff, Lorenzo. Thanks.

To be continued later...
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See also: 

EFN Asia 39: Rainer Adam's Farewell Letter, June 17, 2014

EFN Asia 40: Liberalism, Growth and Reducing Inequality, August 19, 2014

EFN 41: Program of Conference 2014, Hong Kong, September 30, 2014

EFN 42: Other Speakers in Conference 2014, November 04, 2014

EFN 41: Program of Conference 2014, Hong Kong

Friends and readers, may I invite you to attend the Economic Freedom Network (EFN) Asia Conference 2014 this coming 6-7 November 2014, at the Harbour Grand Hong Kong Hotel, Hong Kong. The theme of the conference will be “Liberalism: Promoting Growth, Reducing Inequality”. The event is jointly sponsored by the Lion Rock Institute (LRI), EFN Asia, and the Friedrich Naumann Foundation for Freedom (FNF).

Here is the Conference Programme as of this week. There could be minor changes in the list of speakers and facilitators in the coming weeks as people confirm or change their participation. I got this program from the Program Officer of EFN, Pett Jarupaiboon. Thanks Pett. The photos, I added them here.

(First, second and third rows, respectively: Bill Stacey, Siggi Herzog, Razeen Sally, Choi Byung-il, Pham Chi Lan, Wan Saiful Wan Jan)

Day 1

(MC for Day 1: Wan Saiful Wan Jan, Chief Executive, Institute for Democracy and Economic Affairs (IDEAS), Malaysia)

Welcoming remarks:

-Bill Stacey, Chairman, LRI

-Siegfried Herzog, Regional Director, FNF Southeast and East Asia

Opening Keynote Address

“Economic Growth and Inequality”

- Dr Razeen Sally

Visiting Assoc. Prof, The Lee Kuan Yew School of Public Policy, The National University of Singapore and Director, European Centre for International Political Economy

Session 1: Insights from the Keynote Address

- Pham Chi Lan, Member of the National Council for Sustainable Development and Competitiveness Enhancement, Vietnam

- Dr Choi Byung-il, Professor, Ewha’s Womans University, Korea

- Hong Kong resident (TBC)

Moderator: Bill Stacey

Session 2: Reality Checking in Asia

Asian Cafe

(Facilitator: Introduced and facilitated by Miklos Romandy, Regional Programme Coordinator, FNF Regional Southeast and East Asia and Traon Pongsopon, Programme Assistant, FNF Thailand)

First round:

- Hong Kong/Peter Wong, Executive Director, LRI/LRI rapporteur

- Thailand/Dr Sethaput Suthiwart-Narueput, Executive Chairman, Thailand Future Foundation/Armin Reinartz, Project Assistant, FNF Southeast and East Asia

- Bangladesh

- Myanmar/Aye Kyaw, Principal of Myanmar Human Resource Institute/Nway Nway Soe, Programme Manager, FNF Myanamr

- Sri Lanka

Second round:

- China/Dr Mao Shoulong, Professor, Academy of Public Policy, Rennmin University/Rachaphum Panichsombat, Senior Analyst, Sasin Institute for Glabal Affairs

- Indonesia/Ulil Absar Abdalla, Freedom Institute, Indonesia/Raja Juliantoni, the Indonesian Institute

- Pakistan

- Mongolia

- Vietnam/Dr Le Dang Doanh, Senior Economist, Association of Vietnam's Economists /Dau Anh Tuan,

Director General of the Legal Department of Vietnam Chamber of Commerce and Industry

- Bhutan

Third round:

- Korea/Dr Kim Chung-Ho, President and CEO, Freedom Factory ltd., Korea (TBC)

- Malaysia/Wan Saiful Wan Jan, Chief Executive, IDEAS, Malaysia/ Fareeza Ibrahim, Southeast Asia Network for Development (SEANET)

- The Philippines/Nonoy Oplas, President, Minimal Government Thinkers, The Philippines

- India

- Nepal

- Cambodia

(By row: (r1) Andrew Work, Barun Mitra, Xingyuan Feng; (r2) Thitinan Pongsudhirak, Ken Schoolland, Ronald Meinardus; (r3) Fred McMahon, Andrew Shuen, John Tsang)

Session 3: Property Rights and Equality

- Andrew Work, Co-Founder, LRI

- Professor, Michael X.Y. Feng, Vice President, Cathay Institute for Public Affairs, China

- Barun Mitra, Director, Liberty Institute, India

- Dr Thitinan Pongsudhirak, Director, Institute of Security and International Studies, Thailand

Moderator: Ken Schoolland, Associate Professor of Economics and Political Science, Hawai‘i Pacific University

Cocktails, Dinner

The Economic Freedom of the World (EFW) Report 2014

Introduction of Speaker:

Dr Ronald Meinardus, Regional Director, FNF South Asia

Introduction to the EFW report, Briefing

Fred McMahon, Fraser Institute Resident Fellow and holder of the Dr Michael A. Walker Research Chair in Economic Freedom, Canada

Presentation of EFW Report 2014 to H.E. John Tsang, Financial Secretary, Hong Kong SAR

Introduction of Speaker:

Andrew Sheun, Co-Founder, LRI

Special Address

H.E. John Tsang, Financial Secretary, Hong Kong SAR

Day 2

(MC For Day 2: Andrew Work, Co-founder, LRI)

Session 4: Conference speed dating for all participants

Facilitators: Miklos Romandy and Traon Pongsopon

Topics discussed

 What do you think about the previous presentations?

 What critique do you have?

 What is your own argument?

Session 5:

Dr Tom Palmer, Executive Vice President for International Programs, the Atlas Economic Research Foundation, USA

Session 6: The AEC: opportunities and challenges

Organised by South East Asia Network for Development (SEANET)

CALD-EFN Asia Joint Session

Welcome Remarks

Hon. Oyun Sanjaasuren, MP Chairperson, Council of Asian Liberals and Democrats

President, United Nations Environmental Assembly

Minister of Environment and Green Development, Mongolia

Co-Chair, Civil Will Green Party of Mongolia

Bill Stacey, Chairperson, LRI, Hong Kong

Hon. Markus Löning (TBC) Former Commissioner for Human Rights, Free Democratic Party of Germany

Keynote Address

Hon. Emily Lau, MP

Legislative Councillor, Hong Kong

Chairperson, Democratic Party of Hong Kong

Panel Discussion on the Liberal Economy and Wealth Disparity

Hon. Sin Chung Kai, MP

Legislative Councillor, Hong Kong Democratic Party of Hong Kong

Individual Member, Council of Asian Liberals and Democrats

Dr Parth Shah (TBC)

President, Centre for Civil Society, India

Hon. Saumura Tioulong, MP

Member of the Cambodian National Assembly

Cambodia National Rescue Party

Former Deputy Governor of the National Bank of Cambodia

Dr Sethaput Suthiwart-Narueput

Executive Chairman, Thailand Future Foundation

Moderator: Jules Maaten, Project Director, FNF Philippines

Leave for the Hong Kong Legislative Council

Gala Dinner for CALD, EFN Asia and LI Participants

(MCs: Armin Reinartz, Project Assistant | China Analyst, FNF Southeast and East Asia Office, and

Jaslyn Go International Liaison and Assistant Treasurer, Singapore Democratic Party)

Dr Juli Minoves – Triquell

President, Liberal International

Bill Stacey (TBC)

Chairperson, LRI

Siegfried Herzog

Regional Director, FNF Southeast and East Asia

Martin Lee

Founding Chairperson, Democratic Party of Hong Kong

Individual Member, Council of Asian Liberals and Democrats and Liberal International

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See also: 

EFN Asia 37: Jeju Forum 2014, On Globalization and Inequality, May 29, 2014 

EFN Asia 38: Report on Globalization and Inequality, Jeju Forum 2014, June 02, 2014

EFN Asia 39: Rainer Adam's Farewell Letter, June 17, 2014

EFN Asia 40: Liberalism, Growth and Reducing Inequality, August 19, 2014

Hong Kong Democracy vs. China Dictatorship

I am reposting some interesting reports and opinons here about the ugly turn of events  in  Hong Kong recently where the China Communist Party in Beijing has put its heavy feet on HK people's aspirations for freedom and deeper democratization.
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Undermining the Rule of Law

"As the government and bureaucrats find that they typically cannot count on the legislature making new laws, they interpret existing laws with ever wider discretion. The scope of arbitrary regulation is broadening. This does serious damage to the rule of law, although that probably does not start out as the intention." -- Bill Stacey, Chairman, LRI

From the World Street Journal, opinion papers by Hugo Restal:

Beijing Gets Ugly in Hong Kong

The people of Hong Kong want China to honor the democratic promises it made when the city became a special administrative region in 1997, and this fight for freedom deserves more world attention—especially as Beijing's counterattack is getting ugly.

Agents from Hong Kong's Independent Commission Against Corruption (ICAC) searched the homes of media tycoon Jimmy Lai, his employee Mark Simon and legislator Lee Cheuk-yan on Thursday. The search warrants covered records of Mr. Lai's donations to Mr. Lee and other pro-democracy politicians. The raid is especially ominous because it suggests that Beijing is compromising the independence of Hong Kong law enforcement....

Such arrests and Thursday's searches risk undermining public respect for the law and the government in general. Ironically it was Jasper Tsang, one of Beijing's staunchest loyalists in Hong Kong, who sounded the alarm last year. When leaders lose the public's trust, he warned, even their good policies will be resented. Beijing's steady erosion of the independent institutions left behind by the British will only increase the desire of Hong Kong's people for greater democracy and autonomy."

I have met and heard Jimmy Lai 10 years ago, during the Economic Freedom Network (EFN) Asia conference in HK, also co-sponsored by LRI. The man was so down to earth. Typical rags to riches, never forgetting his roots and inspiring others, helping freedom-oriented people and groups to secure such freedom in the future. Now his house has been raided by the Beijing-loyal autocrats. Sad.

Hong Kong's Hopes Crushed

The people of Hong Kong can plead or protest for democracy all they want, but they can only hold a sham election for Chief Executive in 2017. That was the ruling of China's rubber-stamp National People's Congress on Sunday.

Moderates on both sides of the political spectrum in Hong Kong had urged compromise. They proposed nomination procedures that would satisfy Beijing's concerns while still allowing the free election that China promised in 1997 when it made the city a self-governing special administrative region for 50 years. Beijing not only rejected these ideas, it seems they were never seriously considered. The Communist Party insists on absolute veto power over the choice of candidates....

This Putinist politics gets a pro-business gloss because most of the city's richest businessmen long ago submitted to Beijing's will. Last week Wang Zhenmin, the dean of the Tsinghua University Law School, was sent to Hong Kong to explain that the electoral system is designed to please the business elite: "If we just ignore their interests, the Hong Kong capitalism will stop. So that's why on the one hand we realize universal suffrage in Hong Kong, on the other hand we must guarantee the continued development of capitalism in Hong Kong."

The threat to Hong Kong's capitalism comes not from democracy, but from the cronyism and erosion of the rule of law that are infiltrating from the mainland. Businessmen may want to curry favor with politicians, but it is competition that drives capitalist prosperity. Beijing foolishly believes that turning Hong Kong into a paradise for oligarchs will make it easier to control....

The tragedy for both Hong Kong and China is that the conflict is unnecessary. The city is manifestly ready for democracy, which would give Beijing fewer headaches rather than more. The cautious and pragmatic population would never elect the populist firebrand that Beijing fears. Instead a vibrant city is caught in a downward spiral of disaffection and fear. Mr. Xi deserves the blame for the consequences." -- Hugo Restall

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Britain's Betrayal of Hong Kong

A political showdown looms in Hong Kong. Beijing has stripped the city of the high degree of autonomy it promised in a 1984 treaty with the United Kingdom. Local residents are preparing a campaign of civil disobedience in protest. Yet London has failed to express even mild criticism of Beijing's treaty violation.

The people of Hong Kong overwhelmingly want to elect their next Chief Executive, a reform that until a month ago seemed within reach. On Monday university and secondary students began a week-long boycott of classes to demonstrate for democracy. A new poll from Chinese University shows that one-fifth of the population is considering emigration because of the city's uncertain future.

This turmoil is the result of Beijing's shock decision at the end of August to rig the 2017 Chief Executive election with the most antidemocratic system tabled by its local supporters. Only politicians who receive majority support from a committee packed with Beijing's supporters will be allowed to run....

As a signatory to the Joint Declaration, only the U.K. has the legal standing to protest Beijing's broken promises. So how did London respond? For four days, the Foreign Office said nothing. Finally it put out a statement even more abject than silence: "We welcome the confirmation that China's objective is for the election of Hong Kong's Chief Executive through universal suffrage." Martin Lee, Hong Kong's doughtiest fighter for democracy, rightly summed up London's attitude as "kowtowing to Beijing for 30 pieces of silver."

It's true Britain's power to influence developments in Hong Kong is limited. Yet Beijing's xenophobic bluster shows that it still fears a principled statement from London to defend the territory's autonomy. Chinese media routinely accuse pro-democracy politicians of being funded by foreign "black money"—even as Beijing pumps money into local puppet groups.

When Margaret Thatcher agreed to return Hong Kong to Chinese sovereignty, she defended the decision on grounds that the U.K. would hold Beijing to its treaty commitments. Count that as one more Thatcherite legacy her successors have failed to honor. -- Hugo Restall, 

This news 3 weeks ago says that Britain did write to Beijing and the latter was upset.

The letter from the Beijing foreign affairs committee said the British probe, announced in July, would be a “highly inappropriate act which constitutes interference in China’s internal affairs”.

It urged lawmakers to “act with caution on the issue of Hong Kong, bear in mind the larger picture of China-UK relations and Hong Kong’s prosperity and stability, stop interfering in Hong Kong’s affairs and cancel the inquiry on UK-Hong Kong relations.

http://www.theguardian.com/world/2014/sep/02/china-condemns-british-inquiry-into-progress-of-hong-kong-democracy

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See also:
John Cowperthwaite, Statistics and Central Planning, January 23, 2014
Free Trade 32: Hong Kong's Unilateral Trade Liberalization and John Cowperthwaite, February 12, 2014
Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014
Hong Kong's Corporate and Forest Jungle, June 10, 2014
FDIs, Hong Kong Democracy and China Communism, July 10,  2014

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong

The Lion Rock Institute (LRI) is Hong Kong's  first independent free market think tank. It was formed 10 years ago by locals and some HK-based expats.

LRI Chairman is Bill Stacey (left in this photo), an Australian banker who has been living in HK for more than a decade now. Co-founders of LRI Simon Lee (middle) and Andrew Work (right), a Canadian married to a HK lady and was LRI's first Executive Director. Picture taken during the LRI Reading Salon, October 19, 2013 of which I was one of the foreign participants.

Bill writes for Next magazine in HK. I am posting below three of his articles there: "Finding free markets", "Too much government is corrupting", and "Dare to be different". Photo right, Bill, Margaret Tadeja, also from the Philippines, Nick Solow, a British who has been working and living in HK for more than three decades. Vacant seat was mine as I stood up to take photos :-)
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(1) Finding free markets

Next Magazine (Second opinion A002, 2013.03.14)

Even people who favor free markets will often describe Hong Kong as a city with a business landscape dominated by property developers and their associated conglomerate monopolies. Countless articles seek to “de-bunk” the purported myth that Hong Kong is the freest economy in the world. Such cynicism makes it easier to justify more interventions that chip away at the freedoms we have.

Is the property sector really the most important feature of business in Hong Kong?

Our city is also the home to many companies, large and small, that are highly competitive internationally. They get on with their businesses with little attention or support from the government – a good thing. Understanding what Hong Kong companies need to be internationally competitive must guide public policy.

Compared to many cities, Hong Kong is well endowed with companies founded locally that have grown well beyond our shores and hinterland. It has long been a haven for entrepreneurs grown locally and those who come to Hong Kong from around the world.

Take some well-known examples. VTech produces educational toys found everywhere that are renowned for quality at an affordable price. Johnson Electric is a global leader in small electric motors. Techtronic Industries makes household name power tools. These companies compete more than on cost; they manufacture around the world and have invested heavily in their brands.

Hong Kong shipping companies and ports operators operate in highly competitive markets with efficiency and profitability that reflects the disciplines honed in competitive Hong Kong markets. Commodities traders (say Noble) rise and fall in Hong Kong. We are the home to a growing suite of leading hotel brands that start with the iconic Mandarin Oriental and Peninsula, but have aspiring additions.

Even maligned Hong Kong utilities like CLP and the various Hutchison infrastructure companies have managed competitive international expansion. Hutchison itself has managed to win internationally in retail, ports and telecommunications. The Swire and Jardines groups have rejuvenated conglomerates grown well beyond their local origins.

Our city remains one of the best places in the world to establish new financial services businesses. In education, the Kid’s Gallery franchise is a small and innovative business that shows an economy that is broadening. This journal is a reminder of our vibrant publishing industry. Remember Hong Kong is just a city, with 7.1 million people. However, it has fostered companies with much broader horizons.There are characteristics of these businesses that are intimately tied with corporate origins in Hong Kong. They have an international orientation. Many draw management from all over the world, but have a core of efficient Hong Kong born and educated administration that is in a class of its own. There can be no place in the world with better secretarial support. The Hong Kong diaspora means you can hire people here with connections to every corner of the earth and willingness to be mobile. Efficiency is characteristic of Hong Kong. It is easier to get things done here than most so-called international cities. The rule of law abides in commerce and contracts written here garner confidence as much as those in London or New York. Open borders, free trade, the rule of law, fiscal prudence allowing low taxes, a lean government, well defined property rights and a regulatory burden that remains less onerous than most developed markets all make Hong Kong commerce vibrant and create opportunities for entrepreneurs.Few of these strengths rely exclusively on China for their competitive edge. Being globally competitive is usually the best foundation for success in China.Hong Kong is not unique in struggling to develop competitive property markets. Arguably limited and expensive land has encouraged us to economize on its use, finding a competitive edge elsewhere.Hong Kong's traditional city state rivals all have their merits, but none have grown the depth of business or have had the economic freedom that has allowed Hong Kong to thrive -- and must be preserved -- if Hong Kong is to continue its success. A focus on the positives of a free Hong Kong is as important as addressing the negatives that we are all too well aware of.

EFN Asia 12: Day 1 of Conference 2012

Day 1 yesterday of the 2012 Economic Freedom Network (EFN) Asia conference here at Crowne Plaza East Kowloon. It is sponsored by the Friedrich Naumann Foundation for Freedom (FNF) and co-sponsored by the Lion Rock Institute (LRI), Hong Kong’s first and only free market institute. 

There were 100+ participants, mostly international (Asia, US, Canada, Germany, Spain...). Many locals too, mostly friends of LRI.

Key speakers yesterday morning, from left: Wolf Zumpfort, Deputy Chairman, FNF Board of Directors, Germany;  Abhisit Vejjajiva, former Thai Prime Minister, Rainer Adam, Regional Director, FNF Southeast and East Asia, and Andrew Work, LRI co-founder. He took the place of  Bill Stacey, Chairman of LRI, who came late by a few minutes.

In his opening message, Bill reiterated the importance of free market, rule of law and property rights, in countering the mass appeal of populism which has long term negative impact on the economy. He said that the HK government is treading slowly on more welfarism.

Wolf cited HK's generally free market and globalized economy for its economic prosperity while Germany and many European economies are struggling with welfarism trap, massive unemployment, and the need to cut the expensive, huge debt generator welfare programs to help stabilize their economy.

Rainer reiterated a number of points made by Bill, and praised former Thai PM Abhisit for not bowing to heavy populism in Thailand during his term, that he cut certain subsidies and instill fiscal restraint and responsibility, only to be reversed by the succeeding populist administration in Thailand.

Abhisit discussed many points in his keynote speech. Among them:
* Populism has made the poor become even more dependent on the government.
* Populism breeds high opportunity for corruption, like the rice subsidy corruption.
* It can lead to more social conflict as a result of those continuing corruption.
* Decline of democracy as populism very often leads to authoritarianism and totalitarianism.
* Foreign intervention becomes inevitable later, like the heavily indebted welfarist economies who must be bailed out by other countries and the multilaterals.
* Decline in competitiveness and possible collapse of the economy as free market competition is often shelved.
* But free market has problem with social and economic distribution, thus the need for government to provide some safety nets to those highly vulnerable sectors and households.
* Politicians should be responsible, balance populism with proper education of the voters, avoid quick fixes and welfarism trap.

3. Keynote Address, former Thailand PM , “How Welfare Populism Destroys Prosperity”

The next round of speakers were Sec. Neric Acosta, the Presidential Adviser for Environmental Protection, Philippines, and Sec.Gen. of the Council of Asian Liberals and Democrats (CALD), and Bibek Debroy from India. Bibek was the sudden replacement of Parth Shah, President of the Center for Civil Society (CCS), India, who failed to come due to  problem with his flight from Delhi. Below is part of Neric's presentation.

Neric emphasized the importance of the rule of law, avoid populism despite its temptation to politicians. Bibek said that contrary to many people's belief, politicians in general are not myopic as they balance populist demand by the voters and managing public expenditures.

Lion Rock 2: Populism and Anti-Capitalism, LRI Forum, HK

(Note: the original title of this paper was "Welfarism 22: Populism and Anti-Capitalism...")

Political populism and democracy -- the will of the majority is coerced on the minority in society -- has been with humanity ever since governments or other forms of forced collectivism were invented. In modern times, such populism often takes the form of anti-capitalism, of seeing profit as bad, corporations as evil, economic freedom as unfair. So the populists are advocating more and bigger government -- more and wider regulation of almost anything, more taxation, more prohibitions. Such populists can be explicit or implicit socialists, that the state should regulate and plan almost everything and limit the power of capitalism and entrepreneurs.

It is good that the Lion Rock Institute (LRI, http://www.lionrockinstitute.org/english/index.php), the first and only free market think tank in Hong Kong, will tackle this subject in its two-days Reading Club Salon 2012 - Populism this coming November 3-4, 2012, to be held at Harbour Plaza Resort City, Hong Kong.

LRI guys are among my good friends since we formed Minimal Government here in Manila in 2004. Photos below, 1st to 3rd rows:

Andrew Work, co-founder of LRI in 2004 and its first Executive Director; Peter Wong, the current Executive Director since about three years ago;
Simon Lee, another LRI co-founder; Bill Stacey, LRI Chairman;
Andrew Shuen Pak Man, also co-founder, Raymond Ho, and Nicole Alpert; beside her is Colleen Dyble, previously with Atlas.

The LRI reading salon/roundtable discussion will answer four subjects:

A. Anti-capitalist Mentality and the Religion of All-powerful Government

The class of intellectuals and elites, who lost the power over common men and women, are disturbed by the fact that in modern capitalist economy everyone is equal in their opportunities to make a fortune. Anti-capitalist intellectuals and elites are all over in the ivory towers, parliamentary lobbies, newsrooms and TV studios. What do they believe?

B. Fanaticism and Mass Movement 

The literati, the “men-of-words”, always create dreams of better worlds. Nevertheless without “men-of-actions” to turn words into actions dreams are always dreams. Fanatical men-of-actions who are powerful to drive populist movements are curious creatures. Who are these fanatics?

C. The New Left

In the Sixties, a highly mercurial populist movement, the New Left, began to influence politics in an unconventional manner. The business community and state bureaucratic establishment failed to comprehend the phenomenon and are always busy responding to their nudging and pushing. What do these leftists want? Can we concede and then expect to continue business as usual?

D. Propaganda

Ideally, education and journalism are there to maintain an informed citizenry. Unfortunately, schooling and mass media were made bias against capitalism and used for advancing the fanatical new left causes. What can we do about it?

More photos below, 1st to 3rd rows:
Me, Peter Wong, Grover Norquist, President of the Americans for Tax Reforms (ATR, http://atr.org),  during the 4th Pacific Rim Policy Exchange in Sydney, late September 2010);
me, Peter, Grover and Jim Lakely, also in the same conference in Sydney;
with Andrew Shuen and Jo Kwong, October 2004, during the Economic Freedom Network (EFN) Asia conference, Hong Kong.

I was invited by LRI to be one of the participants in this forum. This event is a prelude to the bigger event, the EFN Asia 2012 Annual Conference, November 6-7, 2012, also in HK. This will have lots of international participants from Europe, US-Canada and Asia. See my discussion about this,  EFN Asia 11: Populism vs. Economic Freedom, the HK Conference.

There will be lots of reading materials on the four subjects mentioned above, before participants will exchange their notes and observations on November 3-4. I am thankful to LRI for extending the invite to me in this small group but intensive discussion.

Governments are expanding almost everywhere, even in supposedly free market Hong Kong. Many rich countries are bleeding fiscally because of the huge debt by their governments, which nurtured populism and heavy welfarism in their economies. Now those governments are limping with huge interest payment for their public debt, and their current revenues are insufficient to pay for huge spending for various entitlements and welfare programs. This shows that populism and heavy welfarism is wrong. People need to be reminded that there is bigger role for more personal, parental and civil society responsibility, in running their own lives. Expecting "more government responsibility" will only invite more opportunism from the political class and more economic uncertainty.

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See also:
Tax Cut 8: Comparing HK and Philippine Taxes, March 04, 2008
Free Trade 6: Unilateral Free Traders HK, Georgia, Who Else? March 30, 2008
China Watch 10: Is China Still a Communist Country? December 21, 2010
Welfarism 18: Hong Kong's Expanding Government (Lion Rock 1), March 27, 2012