My final week in Hong Kong has been both challenging and exciting as the office prepares for the Chinese New Year break. The week has been a great opportunity to learn more about the Chinese traditions and culture at this time of the year, with red pockets (red envelopes given to others filled with money to symbolize good fortune), mandarin trees (a symbol of prosperity) and copious amounts of gold coin chocolate and New Year biscuits filling the streets and markets. The Victoria Park Flower Market has also begun – one of the largest markets of the year in Hong Kong – which is absolutely magical. Hong Kongers as well as the Mainland Chinese enjoy a four-day break over this time, which typically involves travelling to see family and friends – a time that has been said to be the largest annual human migration in the world.

Bustling trams in Sheung Wan

As the lunar year reaches a close, the Lion Rock office has been busy as they prepare for the launch of the first issue of Capitalism.HK as well as participating in several interviews and columns that have gained significant media coverage – especially considering the Heritage Foundation renamed Hong Kong as the worlds freest economy for the 18^th consecutive year the week before. The issue that has become increasingly debated among newspapers and news media this week has centered largely around the pleas from pork sellers in wet markets (the traditional marketplace for a series of small retailers) for the government to intervene in order to stop supermarkets discounting pork to price small retailers out of the market. This has caused a huge stir as supermarkets have only 30% market share in pork and wet market sellers are notorious among consumers for having dissatisfying practices and prices. This has led the Institute to publish a large ad in the local Hong Kong newspapers and press which helps consumers understand the ramifications of protecting inefficient enterprise – something that has been extremely successful in helping the average pork buyer understand that they are the real victims should the price changes of pork (a natural effect of demand/supply changes) be artificially pushed upwards to ‘protect’ pork retailers.

Outside the office lobby before Chinese New Year

I have also had the chance to work on an article for the South China Morning Post surrounding the Ho Tung Gardens heritage debate (last year’s Mannkal intern Lazar had written about the problems of heritage conservation and unfortunately, not much has changed since!) with 70-year-old Ho Min Kwan fighting to save the rights to her own property as she is faced with the huge costs of maintaining a decrepit building worth millions of dollars in land value, or being forced to ‘land swap’ her family home on the Peak with another piece of land owned by the government. This has been an extremely contentious issue and I hope the government moves to correct the scheme following the Chief Executive elections later this year.

On my last day at the office I was fortunate enough to have traditional dim sum in Causeway Bay with some colleagues of the Institute, which was a great way to end this amazing internship as well as learn about some of the food Hong Kong is so famous for! The shanghai pork dumplings, pork buns and sago filled desserts (an interesting mix of small rounded jelly-like balls, coconut milk and sometimes corn or fruit) are surprisingly delicious and will be greatly missed on my return to Australia. 

Enjoying Chinese cuisine in Sheung Wan

I would like to extend my greatest thanks to everyone at the Lion Rock Institute who has taken so much of their own time to help me learn and cultivate my passion for the free market. The enthusiasm and passion of the Institute has helped me in so many ways and has been a constant source of inspiration. I would also like to thank Mannkal as well as Ron Manners for giving me the opportunity to embark on such a life changing experience that has helped me enormously in understanding the challenges faced by modern libertarians as well as the roots of Austrian economics and the legacy they leave to us today.  I hope to continue to fight for liberty and freedom back home in Australia, and will never forget the time I spent being a freedom fighter in the greatest, and freest, economy in the world. 

View from my desk at the Lion Rock Institute

Beautiful Parkland at Tsim Sha Tsui

At Lion Rock I have been busy finalizing my piece on Competition Law and continued to learn a lot about the political environment here as the city leads up to the Chief Executive elections. The topic that has gained particular coverage has been the calls to put a ‘price’ on waste by implementing a levy on all Hong Kong households and businesses depending on how much waste they produce (through a variety of proposed methods). This has been causing a stir amongst the public, particularly those already struggling with the rising costs of living and uncertainty surrounding the current business and economic environment. As many countries around the world begin to adopt these types of environmentally conscious plans, it will be interesting to see if Hong Kong follows a similar path.

Celebrating Mr Potato Head's 60th Anniversary in China

This week also saw the Heritage Foundation announce it’s annual Economic Freedom Index for 2012, with Hong Kong retaining the top place for the 18^th year running. While this is a great thing for the city state as it has seemingly managed to maintain its non-interventionist roots, the Institute has been quick to remind me that the freedom the Hong Kong economy has is continuing to dwindle and it is only when compared to countries that have increased government regulation as a way to ‘fight’ the global downturn (and therefore restricting certain freedoms), that Hong Kong is able to maintain its top ranking.

Chinese New Year Decorations at Times Square

On the weekend I had the chance to explore a bit more of the Island, travelling on the MTR to both Causeway Bay and Admiralty. With Chinese New Year approaching, the streets were filled with thousands of locals buying presents and food for their family and it was amazing to see, and after braving the infamous department store SOGO (known for its very tempting sales and enormous selection of items) I now understand why Hong Kong is one of the greatest shopping destinations in Asia – they take their shopping very seriously! I look forward to continuing to learn more about Hong Kong and will hopefully try and fit in as much sightseeing as possible as I finish my stay.

Happy New Year! 2012 began in Hong Kong in spectacular fashion with lots of fireworks, street shows and celebrations. Although Chinese New year doesn’t begin until later in the month, the western New Year was still widely celebrated by many locals, marking the occasion as the start of Chinese New Year celebrations. The shops and streets have slowly started to put up Chinese New Year decorations and now nearly every corner has been flooded with red and gold streamers, tinsel and motifs. It will be an exciting next few weeks as the local community begins to welcome the year of the Dragon.

New Years Celebrations on Victoria Harbour

Working at the Lion Rock office has been steady this week with lots to do. I have been busy looking into several issues that are gaining significant media coverage, such as the influx of pregnant Chinese women having babies in Hong Kong and the consequences of minimum wage policy, which is becoming adopted across particular provinces in China and was enacted in Hong Kong last year. I had also been able to have lunch with the Chairman of the Institute and former UWA graduate Bill Stacey, who provided some great insight into the working life of an Australian in Hong Kong as well as his own take on public policy and the political sphere.  

Dim Sum Lunch in the office

At the end of the week I was fortunate enough to see some policy ‘street fighting’ (a term coined by one of Lion Rock’s directors) in action, after attending a conference held by Momentum 107 (a public advocacy group in Hong Kong founded by one of the directors at Lion Rock, Simon Lee) with guest speaker Frederick Fung, member of the Legislative Council who is currently running in the 2012 Hong Kong Chief Executive Election. The conference was mainly based around his thoughts on competition law and the exemption of statutory bodies from the Act.

Outside a shopping complex in Tsim Sha Tsui

In my downtime I have been reading What Has Government Done to Our Money? By Murray N. Rothbard (the pdf file is accessible on mises.org/money.asp) for a book club which is starting at the end of this month. The book has been very interesting and I would recommend it to anyone who is looking to gain a background on monetary evolution and the workings of monetary policy through time.

My third week at the Lion Rock Institute has been full of activity as the office gets ready for the Christmas break. Around the city, its festive atmosphere is reaching a peak and I have been fortunate to view several choirs and orchestras performing Christmas songs from my office window as the tram takes them around the city to perform. The weather is beginning to get cooler as well, adding to the festive vibe (Christmas day is predicted to hover around 15 degrees).

In the office I have been continuing with the development of my article on Competition law and have started (with the help of one of our directors) learning how to cultivate and express my own opinion effectively on topical issues regarding Hong Kong’s economy. This week has focused primarily on the publicity surrounding Hong Kong’s two major energy companies, CLP Power and Hong Kong Electric, and their recent tariff increases to 9.3% and 6.4% respectively, which have caused considerable public outcry as the region begins to move into the colder months. I have been given a crash course on how the power industry works in Hong Kong and the different political standpoints that have been flooding the media recently, which has been very interesting.

Winter solstice, the shortest day of the year in Hong Kong, occurred on the 22^nd of December and is a large event for the people of Hong Kong. For many, including the Lion Rock office, this means that the work day is cut short and workers leave to go home and prepare dinner for their families in the afternoon to celebrate and come together. This gave me a great opportunity to catch up with one of our directors (and fellow Australian) to discuss his points of view on the Competition Law Bill in Hong Kong as well as his own experiences working and living in the region. I was also able to gain some insight into achievements of Lion Rock of late and how that has affected the continuation of public policy approval.

Next week I will return home to Australia for a few days over Christmas before flying back to Hong Kong to continue my work with Lion Rock. The first few weeks have been such an exciting experience and I look forward to continuing my time in such a bustling and dynamic place.

My second week in Hong Kong has been tumultuous, in the best way possible. The city has turned on all of its festive charm as we approach Christmas, with some of the best decorations I have ever seen. It has been quite cold (by Australian standards anyway, staying between 17 – 20 degrees all week) but very clear which has allowed me to have a good look around the Island and explore more of this amazing region.

View from The Peak, Hong Kong Island's highest mountain

This week at The Lion Rock Institute has been full of work and very enjoyable. After finalizing the current issue of the journal and sending it off to the printers, I have been very busy helping out around the office and working on my article for the next issue of Best Practice, which will be renamed Capitalism.HK under a new editor (Benjamin Marks, current editor-in-chief of Economics.org.au). I have been researching the proposed Competition Law Bill in Hong Kong as well as Australia’s history with our own competition regulation and ACCC, which has been very interesting. The team has also been busy preparing a new website for Capitalism.HK which will help Lion Rock to reach an international audience with its articles and publications on the benefits of the free market.

I have also been given several insightful talks by one of Lion Rock’s co-founders and directors, Andrew Shuen, on the importance of message crafting and the power of effective communication. This has been extremely thought provoking and has taught me a lot about the importance of ‘reaching beyond your base’ and understanding the value sets of the everyday citizen.

Christmas cakes at a local bakery

At the end of the week, I was given the opportunity to listen to a talk from Andrew Work, another co-founder of the Institute that is the current head of the Canadian Chamber of Commerce in Hong Kong, to a group of MBA students at the beautiful Hong Kong Club Building. The talk was essentially a crash course on Hong Kong’s economic and political history, as well as an update on its current public policy and government workings. The lecture provided me with some fantastic information and insight that you can only learn from a person who has lived here most of his working life, and has given me some great ‘did you know’ facts to take home with me (such as, did you know that 50% of the citizens of Hong Kong live in public housing? For an Australian, that seems almost unimaginable).

Outside of work, I have been able to experience some of Hong Kong’s true Chinese cuisine thanks to Ines who has taken nearly every lunch break as an opportunity to show me what great food the region has to offer. Having lunch like a local is really one of the best ways to learn more about the way of life here, and I must say, I now understand why the Dim Sum here is so popular!

View from The Peak, Hong Kong Island's highest mountain

Christmas celebrations at the Star Ferry Pier

After arriving from a very smooth 7 hour flight from Perth, I found myself in the center of one of the world’s most dynamic and fast-paced economies, Hong Kong.

For a total landmass of only 1,104 square kilometers and a population of over 7 million people, my trip from the airport to my apartment in Sheung Wan was surprisingly efficient – as I soon learnt is the norm here. Everything, from catching the MTR (mass transit railway) to eating lunch is done with absolute precision and no time is wasted, making me realise that a lot of the credit for Hong Kong’s success goes to not only its policy makers, but to the insatiable collective drive of its people.

My first week in the Lion Rock office has been rather busy as myself and the Lion Rock team began to finish editing and finalizing the Institute’s latest issue of Best Practice, a public policy journal for Hong Kong that advocates a strong free-market based approach to policy issues. This issue has writings from 19^thCentury French economist Frederic Bastiat and some more modern day musings from Bill Stacey, chairman of Lion Rock, and Neville Kennard of Kennard’s hire and self-storage, so it makes for quite an interesting read. I have also begun research on an article for Best Practice’s next issue, which will be based on the Competition Law Bill that has been hotly debated for the last several years and has just been accepted by the government. It will be interesting to see the ramifications on the business environment here should it be made into law early next year.

I have also had the chance to see a lot of Hong Kong outside of work thanks to the lovely Ines from Lion Rock who has shown me around both the Island and Kowloon, most notably the infamous shopping malls that seem never ending. I was also able to visit the Peak, the highest mountain on Hong Kong Island, which was breathtaking.

This week I will be working more on the article and liaising with the new editor of the journal to ensure everything is running smoothly for the next issue.

I’ve only just completed my final blog post that covers the last 2 weeks of my time at Lion Rock since the past fortnight has been intense but well worth the challenge having provided me with the ideal conclusion to an amazing internship.

One of the highlights last week was having had the opportunity to meet many of the founders like Simon Lee and Bill Stacey for the first time over dim sum where I distributed a publication from the ‘Institute of Public Affairs’ and we discussed some of the shortcomings associated with the education system in Australia: in particular, the growing trend that is emerging whereby an all-round rudimentary historical knowledge that gives students basic understandings of the foundations of the Western Civilization upon which our nations have developed is being wholly rejected in favor of piece-meal, departmentalized bites of knowledge focusing on method rather than substance. Bill Stacey is chairman of the Institute and had just gotten back from an overseas business trip and was a pleasure to have lunch with. It was great hearing about his earlier days at the University of Western Australia and the research he was doing that related to libertarianism which ultimately led him to meet up with Ron Manners and become so involved with Mannkal over the years, having recently taken up post on its Advisory Council. Bill Stacey has been a strong advocate of market reform over the past 25 years and I thought it would be pertinent to attach a paper (located at the end of this blog entry) which I came across this week in the officethat had been co-authored by Bill and provides a very good critical analysis of the recent, ‘Global Financial Crisis’ looking to the causes and actions that should have been taken.

One of the most rewarding things that I was lucky enough to experience over my entire time at Institute were the 2 one-to-one workshops that were given to me by founders Simon Lee and Andrew Shuen last week. The first by Simon Lee was catered to introducing me with a historical grounding in the cornerstones of Hong Kong’s astounding success and continued resilience. The eloquence and simplicity with which Simon delivered the presentation and the depth to which he explored the subject are commendable and instilled in me an entirely new way with which to view Hong Kong, it’s history and people. Inter alia, he got me particularly interested in researching further the work of Saul Alinsky and his book, ‘Rules for Radicals’ as well as the work of political scientist Ronald Inglehart and his theories regarding ‘generational value change’. One of the strongest messages Simon imparted in me was that of the best technique through which think-tanks get their message across; which is to work with influencing peoples’ values within their particular individual belief systems rather than working to change the belief systems that can only result in what Festinger termed ‘belief disconfirmation’ that comes about from cognitive dissonance. The second workshop with Andrew Shuen focused on the technical aspects associated with working in a free-market libertarian Think Tank and looked specifically at the most effective communication techniques a person can use to frame a debate and shift the ‘window of possibility’ to the right. I found Andrew to be an incredibly down-to-earth individual who was so passionate about his beliefs and was a fantastic mentor who helped instill in me a new-found appreciation for much of the finesse associated with furthering libertarianism in a public debate and representing a right-wing Think Tank institution. All-in-all, these one-on-one workshops that were provided to me helped in not only allowing me have a better understanding of Hong Kong and the audience for whom I was writing but also how to critically analyze proposed public policies as well as be the most convincing and effectual when trying to further libertarian ideals in a different context.

Apart from having completed 2 pieces for the ‘Best Practice’ Journal, finalizing work on an op-ed for ‘South China Morning Post’ and managing to prepare a speech for the last Happy Hour of the month I had the enviable opportunity to visit Macao and Disneyland with a colleague from work over the 2 weekends. Macao was an amazing place to visit particularly given the fact that it is the only other special Administrative region (SAR) of China apart from Hong Kong that operates under the principle of, “one country, two systems” whereby, despite the practice of socialism in mainland China; Macau has and will continue to retain its established capitalist system under a high degree of autonomy until at least 2049 (50 years after reunification). Unsurprisingly, as a result Macau has had a thriving economy having recorded a real growth rate of 27.1% in the last quarter and is consistently ranked as one of Asia’s freest economies which has attracted foreign investment to a peninsula whose land area is only slightly larger than that of Rottnest Island. Since the government monopoly license in the gambling industry was lifted in 2002, more and more foreign gaming firms are investing billions of dollar’s into Macao with new casino’s being opened each year such that Macau has now become one of the world’s gambling centres even surpassing Las Vegas in gaming revenues in 2007. The sustained growth of tourism particularly from the mainland following China’s easing of travel restrictions can only mean that Macau will continue to grow into the future. I really do recommend that anyone that does have some time to spare in Hong Kong does take the 1 hour ferry ride to Macau to really see what it’s all about not to mention the fact that it’s colonial Portuguese past has resulted in the truly unique culinary mix of Cantonese and Portuguese cuisines which are sure to make your mouth water.

Since I have constantly been following different public policy measures that have been implemented or are yet to be introduced in Hong Kong I thought it would be a good idea to summarize a few of the bigger issues and the Institute’s respective position. The running vein that runs through any objective analysis of these government policy initiatives is how the practical ramifications that are often already being evidenced paradoxically reflect public policy measures that only serve to further the problems that were initially intended to be alleviated.

The objective behind the government’s introduction of a minimum wage has all the right intentions but all the wrong effects. Despite repeated efforts by the Lion Rock to educate the public on the logical consequences that would arise following the institution of a minimum wage law, the bill was passed through the legislative council with astounding speed spurred on and supported by the public and such populist groups as the ‘post-80’s movement’ which is an amorphous political movement that has begun taking to the political stage comprising a high proportion of students and young professionals. Any move to introduce minimum wage law spits in the face of the free-market fabric that has come to epitomize Hong Kong which is widely regarded as the freest economy in the world. Of course, there is an emotive association to help the lowest paid individuals by through an increase in their wages but all this achieves is more harm than good. As Henry Hazlitt, a well-known American economist from the Austrian School of economic thought summed up so well, “You cannot make a man worth a given amount by making it illegal for anyone to offer him less. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment. You do harm all around, with no comparable compensation.” Hong Kong has everything to lose and going ahead with such a policy based on the emotional but inaccuratepremise that employment now is an exploitative relationship whereby businesses will never raise the wages of their workers through their own voluntary volition. Not only will basic economic analysis tell us that unemployment will rise but one can easily predict the financial losses related to government efforts associated with getting the mass numbers of individuals employed as a result of the law employed but even more important is the consideration that should be given to the net loss to Hong Kong society that will come about as a result of consumer prices that have driven up to cover the higher labor costs. Real wage rises come about, not through increases in the wages of workers who maintain the same economic output but through the creation of new wealth as a result of greater productivity that will naturally, without government intervention spur on higher wages and lower prices. Although the minimum wage bill passed by the Hong Kong Legislative Council on 17 July 2010 is yet to come into force on 1 May 2011, many events that have been occurring during my time in the office reflected the negative by-products of the law already taking effect in eliminating many entry-level job opportunities as evident in the recent moves by large businesses such as the popular Hong Kong ‘Café De Coral’ food chain which has started introducing self-service meal ordering machines which has replaced the need to employ individuals to get the same job done. Ultimately, the legislation aimed at helping those who are the least well-off directly harms its intended beneficiaries.

Government regulation and intervention in Hong Kong has been steadily growing and recent moves to introduce Competition Law legislation has been one of the biggest threats to the economy’s dynamics. Lion Rock has played a crucial role in opposing the law and educating the public on its fallacies by initiating public debate from the onset and achieving to delay the law ‘s implementation from the onset through live television and radio debates and the publication of articles in the press. The Institute has achieved success in having the law delayed over the years but the way things stand it seems that the law will indeed be implemented. The current wording of the bill is extremely vague which is precisely where most of the problems lie as the bill contravenes against the basic principle of legal security and the rule of law through it’s highly vague nature and the highly complex concepts that it seeks to define in an ever-changing active free market where no, ‘one size fits all’. The competition regime will be enforced by a specific tribunal while regulators will be afforded search and seizure powers and the potential to fine companies up to 10 per cent of worldwide turnover for each year of contravention. A major shortcoming of the proposed bill is that no mechanisms have been set in place to prevent the tribunal from granting exceptions to certain industries and companies or objectively ascertaining whether ‘anti-competitive behaviour’ which is so broadly defined has taken place which means there is clearly room for the system to be manipulated. The hypocrisy of the bill is epitomized by the immense number of exemptions that apply to the government and quasi-government bodies which distort competition and to whom the laws should equally apply. It is as if due consideration to the way monopolies even form in Hong Kong has been overlooked since it is government intervention which frequently creates them in most instances as evident in such recent instances such as through the granting of special deals for companies to set up Disneyland and Cyberport, or through the restriction of competition in the Stock Exchange or Jockey Club. Ultimately, the only people that will benefit from the law will be the legal profession who have major vested interests in the bill and to whom the high administrative and compliance costs that arise from the law once implemented will flow to. Competition law will only go against Hong Kong’s proud tradition of free enterprise and end up in a limitation of market participation and a weakening of Hong Kong’s competitiveness in the financial world. I invite any interested readers to look over some of the Institute’s submissions concerning this proposed legislation, which has passed its first reading in the Legislative Council and is likely to pass through parliament despite its contentious nature.

As I end this final blog entry I would like to take this opportunity to express my thanks everyone at the Lion Rock Institute for the great time I’ve been able to share with you all. Although I’ve only been in Hong Kong for a relatively short period of time and have only really just started getting used to the way things operate; there is no doubt the experience has provided me with an invaluable opportunity to find out how things really work in a think-tank as well as help me soak up so many new ideas and perspectives on topics that are quite specific to Hong Kong yet could equally apply to other jurisdictions. I appreciate the attention and time I was given by so many of the founders and employee’s of the Institute whose help made my transition into Hong Kong that much easier. I extend equal thanks to the Mannkal Economic Education Foundation whose ultimate support and interest in individuals like myself is what allowed for this internship experience to even be possible. I hope to continue to fight for liberty wherever it is I end up being in the future and will never forget the time I had in Hong Kong and the thing’s I learned.

This week has been very lax which is not surprising since it is the week after CNY and most people are still getting to grips with having to get back to work again while many others are still out of the office on holiday etc but nevertheless this is not to say the week just went by with very little getting done.  For me, it was very productive as I began work on a new project that will hopefully prove useful for both Mannkal and Lion Rock. It will deal with looking at populist movements such as the Tea Party Movement that is making a mark in American politics, as exemplified in the recent congressional mid-term elections where a number of tea party supporting, “We the People” Republican candidates scored sweeping victories in the House of Representatives thereby ending 4 years of a Democratic majority. Ideally, I hope to analyze what it is that has brought the grassroots movement to such prominence and hopefully look to its’ broader implications and thus provide insightinto some of the way in which populist movements could be brought to fruition and be effective in creating change within other jurisdictions.

What I’ve found so valuable this week is the crash course I received from the editorial team at Lion Rock which has distilled in me some of the core skills needed to write convincingly and ‘package’ the message/s I am trying to get across to the average ‘Hongkonger’. In effect, everything comes down to getting the average reader interested about Libertarianism and the virtues that it espouses which is sadly getting more and more difficult to invigorate in today’s Hong Kong where the general public is become more risk-averse and the atmosphere reflects quite strongly increasing undercurrents of distrust and resentment of the entrepreneurial individuals in Hong Kong who have worked hard and achieved success and prosperity in their respective fields. This reality stirred me to do some research on local legend and world tycoon LiKa-shingwho to me, has come to epitomize the Hong Kong dream of rising up from poverty to achieve success through hard work, unending commitment and ambition. In the words of Li, “I wasn’t lucky. I worked hard to achieve the goals I set for myself.” He used to be admired being coined the ‘superman’ of past generations yet his popularity is clearly in decline yet story is one thatreflects best what HK’s free-market system has allowed individuals to achieve. Li started from such humble beginnings in mainland China having to flee at the young age of 12 to Hong Kong as a poor immigrant in order to escape from the turmoil that came with Japanese invasion. In 1943, he was subsequently forced to drop out of school at the age of 15 to work 16 hour days at a plastics factoryfollowing the death of his father in order to support his family. Yet, it was his entrepreneurial flair, determination, stamina and willingness to take risks amidst all adversity which is what led him to start his own plastics factory in 1950 and then go on to create one of the largest conglomerates in the world with businesses covering nearly all facets of everyday life in Hong Kong; banking, construction, electric power, real estate, plastics, cellular phones, satellite television, cement production, retail outlets, hotels, airports, electric power, steel production, ports, and shipping. On top of these achievements, he is also noted as one of the world’s most generous philanthropists having donated in excess of 1 000 000 000 US while having further pledged recently to donate an additional third of his fortuneto philanthropic projects across the world. Sadly, his peak has seemed to pass as hostility towards those who have attained success and wealth is driven by envy and a belief that corporatist activity in Hong Kong is rife having allowed some to use to generate their wealth through political links which is understandably why the entrepreneurial spirit amongst the people is waning which is further threatened by increasing external obstacles set in place by an increasingly interventionist government (increasing regulation, taxes etc). I think that one of the important goals of a free-market think tank in Hong Kong is to make sure the the spirit doesn’t wane and become a thing of the past but celebrate all that Hong Kong has achieved backed by it’s traditions of enterprise and love of success.

I took time over the weekend to do a bit of sightseeing of ‘Hong Kong Island’ and the Central district which was the earliest place of development by the British colonialists. The area served as a centre for trade and financial activities in the early days of the colonial eraand now continues with this legacy serving as the principal area for financial and commercial business in the city with many financial corporations such as HSBC and the Bank of China housing their headquarters in the area. Most of the pics I’ve included with this week’s blog can give you a good idea of great fusion in the area between new and old with some of the oldest surviving colonial building such as the ‘Legislative Council Building’, ‘Court of Final Appeal’ and ‘St John’s Cathedral’ juxtaposed to some of the more ostentatious skyscrapers of the ‘HSBC Main Bulding’, ‘Bank of China Tower’ and the more recent ‘International Finance Centre’ which can boast being the eighth-tallest office building in the world.

The week was concluded nicely with meeting up with a friend of the Institute from the US who had also been an intern for some time at LRI but is now completing a masters in economics at the University of Hong Kong.

Happy Chinese New Year!! It’s been a rollercoaster of a week packed full to the brim with work, festivities and delicious local food  Unlike most of the rest of the people in Hong Kong around this time, the Lion Rock team was busy at work putting together all the hours of research we had done and coming up with a working draft to meet the tough deadline that had been set the week before. On top of this we made sure we were on track with finishing off all the last minute things that had to be done with respect to the journal that was due to be sent off to the printers so soon. I was able to do some research on the tax system in Hong Kong which I thought would be good to share with readers especially since it is, “the territory’s tradition of simple and low taxes… [that] Is widely seen as a main reason for its stunning rise to prosperity” (The Economist, 2000). Hong Kong was one of the first countries in the world to adopt to a unique form of optional ‘flat tax’ system resulting in a top income tax rate of around 17% for individuals and a flat rate of 16.5% on corporate income.  While unincorporated businesses enjoy an even lower rate of 15%. There is no sales tax, GST, capital gains tax, tax on dividends or interest income and no payroll taxes since personal exemptions are so generous, however workers are required to put ~10% of their income into a private retirement account. In the last financial year, tax revenue as a percentage of GDP was only around 13% compared to a whopping 30.8% in Australia. What makes the tax system work so well is it’s innate simplicity with the entire ‘Inland Revenue Ordinance’ comprising of around 200 pages setting out the entire substantive as well as the entire machinery for it’s administration etc. Furthermore, the few decisions of the courts as to the correct interpretation of the Ordinance have been few in number and have always been respectful of taxpayers’ rights. The tax regime really should be admired as being a contributing factor to Hong Kong’s prosperity where entrepreneurs, workers and other participants are not being penalized in creating wealth.

All of the rush in the office this week was mainly attributable to the fact that the first, second and third day of the Lunar New Year were public holidays which left less than half of a week of productive work to be had. Nevertheless, we achieved most of what we had set out which was great news.

Lunar New Year’s Day was on the 3^rd of February. You know it’s Chinese New Year when all of Hong Kong’s shops pull down their shutters and the city becomes even more crowded than it usually is with an influx of mainlanders who come to celebrate on the streets that are littered with red ribbons (red symbolizing good luck and believed to ward off evil spirits) and small mandarin orange trees that are considered traditional symbols of abundance and good fortune. It wasn’t hard to see that Chinese New Year is one of the most celebrated festivals in Hong Kongand it was interesting to see how many parallels could be drawn to the western celebration of Christmas with the frenzied gift giving and familial traditions and customs that were highlighted. I had the opportunity to visit a few of the temples and shrines in the inner city that were just packed with people who were finding the time to drop in and light an incense joss stick which is a medium for sending prayers to local deities to bring luck for the year ahead. I spent the afternoon around Salisbury gardens and Kowloon Public Pier in TsimTsamShui and amidst all the celebration was even able to witness a public demonstration on the persecution of the Falun Gong by the administration in mainland China which was interesting but confronting and seemed so out of place in a day full of such festivities. At night, the Victoria harbor-front area was transformed into a giant street party with a huge CNY Night parade sponsored by Cathay Pacific which was full of illuminated floats and vibrant performing groups but what really provided me with the most memorable start to the Year of the Rabbit was celebrating CNY with a local Chinese family from the Institute. I was literally showered with Red Lai See envelopes which are the traditional gifts given during CNY usually from a senior to a junior and are believed to bring both prosperity and good luck to both the giver and recipient. The Chinese invented fireworks around the 12^th century as a way of scaring away evil spirits and it’s no surprise that the fireworks I witnessed on the Second night of the New Year was, without a doubt one of the biggest spectacles I’ve witnessed in the sky and even though the entire area of Victoria harbor front was packed with thousands of people; once the fireworks began everyone had front row seats.

Instead of visiting Macau like I had planned, I ended up cancelling the ferry tickets I had purchased and decided to visit the Peak with friends since it was such a clear day (which is pretty rare in HK) so we thought itwould be better to not miss out on the visit to the peak during the day and really be able to enjoy truly magnificent views before us. The pictures I’ve included from the Peak speak for themselves.

All these festivities have certainly recharged my batteries and have made me long to get back into some challenging work and research with the Institute.

After a turbulent 7-hour flight I arrived in Hong Kong and upon exiting the terminal, I was surprised at seeing just how organised and smoothly things seem to be running in this immense city with a population of just over 7 million. Within 15 minutes of arriving, I was on my way with an Octopus card in my pocket (an indispensable item for the Hong Kong visitor) catching the Mass Transit Railway (MTR) directly to Jordan Station which is only a minute’s walk from my self-serviced apartment in the heart of Kowloon.   Having found out on the way that Hong Kong had maintained its’ spot at the top of the 2011 Index of Economic Freedom compiled by, ‘The Heritage Foundation’ in conjunction with the ‘The Wall Street Journal’ for the 17th year in a row made me all the more excited about spending time working in one of the world’s most competitive financial and business centres, for one of Hong Kong’s leading non-profit, public policy think tanks.

Honestly, my first week in the office has been challenging but it’s precisely this that has made it all the more enjoyable. After having been given a crash course on the work the Institute had been doing recently, I was put straight to work on ‘Best Practice’ which is the Institute’s own journal that aims at providing recommendations on both law and policy, and advocating free market ideas and solutions. The reason why the week has been so hectic and challenging is because of the rush to complete and review the Institute’s latest quarterly edition of ‘Best Practice’. Working on the journal has provided me with a fantastic opportunity to get acquainted with some of the most pressing policy issues and events in Hong Kong. On top of this, we have been given a deadline to complete a report on the state of land policy in Hong Kong for a leading international think tank which is due early next week. The focus of my work this week with respect to this report has centred specifically on researching the current repressive policy that is in place with respect to privately owned buildings that the government has ear-tagged as possessing ‘historical significance’. It was during this research that I found increasingly alarming recent examples of where property rights and the rule of law have been contravened quite blatantly in the government’s rather hap-hazard and retrospective approach to heritage conservation. Apart from assisting the Institute with this research for final report, I hope to complete an op-ed on the topic to hopefully be published in the next edition of the journal as well as the website to serve as an educational resource that can expose what is really occurring and being undermined in the processes that have taken place. The people at Lion Rock have been so supportive, with special mention to Nicole who has helped me settle in so fast, and has taken up so much of her own free time to take me all over the place to see all that this great city has to offer.

It is clear that Hong Kong boasts one of the world’s most prosperous economies because of it’s strong adherence to a policy of small government, low tax and light regulation which is what had been set in place by such great men as Cowperthwaite who insisted that Hong Kong employ positive non-interventionist policy which set in motion the appropriate conditions which allowed for the economic miracle that ensued and encouraged the entrepreneurial spirit in Hong Kong to develop and flourish. I am reminded of this fact every time I take in the sight of Victoria harbour and begin to imagine the transformation of this place from a port of small fishing communities and farmers, famously referred to by Queen Victoria as a ‘barren rock’, to one of the economic centres of the world. Where tea clippers once sailed, todays harbour traffic consists of international cruise liners, container ships, ferries and cargo boats – the hustle and bustle of enterprise in Hong Kong never stops. Sadly however, my week of work at Lion Rock this week has already demonstrated to me how Hong Kong does seem to be starting to turn back on it’s legacy that libertarians like Friedman found so dear. Recent events show a government that is interfering more and more in the economy by responding to populist pressures, and is thereby slowly but surely damaging the institutions that lie at the heart of a free society. Apart from the constraining land policy that I’ve begun to analyse; the introduction of a statutory minimum wage to be rolled out in may this year which will only cause greater unemployment and hit those at the bottom hardest, as well as likely passage of poorly drafted competition policy are just some of the more recent policies that do not respect Hong Kong’s legacy and really make one begin to question just how ‘free’ Hong Kong really is. I invite any readers that are interested in finding out more about the implications an introduction of a competition bill will have in Hong Kong and it’s fundamental flaws that will arguably lead to greater limitations in market participation by looking over some of the well-prepared submissions of the Institute that are available publicly on the LRI website; http://www.lionrockinstitute.org/english/index.php.

Aside from work at office, I have had the pleasure to meet up with a number of like-minded individuals and entrepreneurs at the monthly Lion Rock Happy Hour at, ‘The Globe’ which was organised so well by Nicole last Thursday. Meeting successful people from all over the world in a quaint little bar in the surrounds of Soho and having the opportunity to hear some of their personal stories that have showcased so much of what a free society can allow creative, intelligent and daring innovators to achieve is truly inspiring. I’ve also managed to catch-up with a few friends during the evenings and explore some of Hong Kong’s street markets like the Temple Street Night Markets which are awash with rows of brightly lit stalls hawking a variety of goods and services from remote-controlled helicopters to  busy food stalls and fortune tellers. I’ve nearly mastered the art of bartering and bargaining in the street markets! As for food, it’s no surprise that Hong Kong is regarded as the culinary capital of Asia with it’s truly unique fusion of eastern and western styles. I really just can’t get enough of Hong Kong’s famous wonton noodles or dim sums! As for weather; there has been minimal humidity at an average temperature of around 17 degrees celsius.

I’ve begun reading the book titled, “The Anglosphere Century” which deals with a concept of the ‘anglosphere’ coined by James C. Bennet whom I was fortunate enough to meet in late October last year at the, “Sun Rises in the West’ Conference organised by Mannkal. I intend to write a review on the book for Lion Rock’s journal so keep your eyes out for the next quarterly issue!!

I greatly look forward to next week as Chinese New Year festivities begin to make way for the year of the rabbit which will hopefully bring with it some much-needed respite after the fierce year of the tiger. I hope to use the public holidays over the 4 days of celebrations to take the time off to explore the historically rich port city of Macau and will be sure to keep you guys updated.