Journal: News & Comment

Saturday, August 31, 2002
# 9:51:00 AM:

Don't fall through the gaping chasms

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Back in March I talked about how, while Hong Kong is listed by various think-tanks as the most "economically free" jurisdiction in the world, it can be a pretty crappy place to live, since economic freedom and quality of life don't necessarily correlate.

Today's National Post shows that, when things start going sour, that's especially true. A worldwide economic downturn, decreased political freedom, and (with some irony) competition from mainland China has made poverty, unemployment, and unrest suddenly big problems in what used to be held up as a model capitalist economy.

In Hong Kong, "almost half the population has less than a Grade 10 education," while real estate prices have plunged by 60%, and the city "has the most basic of social safety nets. To qualify for social assistance, you have to be virtually destitute. There is no unemployment insurance or old age pension."

I'm not writing this out of schadenfreude for the people of Hong Kong. And free markets can do amazing things. The problem is when you expect them to do everything, always. Yes, it's expensive to buy a safety net, and that eats into profits and ups taxes. But when the bottom falls out, no net means the fall is hard, and sometimes lethal.


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