[Vision2020] Is Hong Kong Actually a Free Market Shangrila?

[Ron Force]

The future is clear: outsource U.S. health care to China. Oh wait...someone 
already thought of that:

http://www.cepr.net/index.php/publications/reports/free-trade-health-care/

Free Trade in Health Care: The Gains from Globalized Medicare and Medicaid  
October 2009, Dean Baker and Hye Jin Rho

The huge gap between the cost of health care in the United States and  the cost 
in other countries with comparable health care outcomes  suggests the potential 
for substantial gains from trade. This paper  describes one mechanism for taking 
advantage of these gains – through a  globalization of the country’s Medicare 
and Medicaid programs. The  projections in this paper suggest that the country’s 
long-term budget  situation would be substantially improved if beneficiaries of 
these two  programs over the age of 65 were allowed to take advantage of the  
lower-cost health care available in other countries (that also have  higher life 
expectancies than the U.S.). This could also allow them to  enjoy much higher 
retirement incomes than they would otherwise receive.

Ron Force
Moscow ID USA




________________________________
From: "nickgier at roadrunner.com" <nickgier at roadrunner.com>
To: vision2020 at moscow.com
Sent: Thu, July 29, 2010 9:04:44 AM
Subject: [Vision2020] Is Hong Kong Actually a Free Market Shangrila?

Good Morning Visionaries:

In order to celebrate the 11th anniversary of the return of Hong Kong to China I 
chose this topic for my weekly radio commentary/column. 


The fact that Hong Kongers enjoy the advantages of some of the best public 
education in the world, universal medical coverage that takes only 6 percent of 
GDP (U.S. at 16 percent), and government subsidized housing (the government owns 
all the land!) offers a different perspective than that given by Milton Friedman 
30 years ago in "Freedom to Choose" (book and PBS series).

As I did a comparison to social democratic Singapore my words grew to the point 
where a separate column on this city state will be next week's topic.  The full 
essay on both is attached.

With regard to corruption I did not find any advantage for "Confucian" 
capitalism.  In fact European countries scored much higher than all the Asian 
countries with a strong Confucian tradition.

Yours for the Middle Way in Ethics and Economics (and everything else!),

Nick


IS HONG KONG ACTUALLY A FREE MARKET SHANGRILA?

Eleven years ago this month there was much anxiety when British authorities 
handed Hong Kong over to China, whose economic revival was dependent on this 
prosperous port city. The Communist government, while putting some controls on 
political freedom, has allowed the former colony an amazing amount of economic 
independence.

With the highest income tax rate at 17 percent Hong Kong appears to be a 
libertarian's dream.  There is no sales tax, no tax on capital gains, and 
corporations pay 17.5 percent on their earnings.  


During the Asian financial crisis of 1997-98, the Hong Kong government was 
forced to bail out its banks and it still holds $50 billion of their stocks. The 
most significant government intervention was a recent stimulus package that 
amounted to 5.2 percent of Gross Domestic Product (GDP), which compares to 6 
percent for Obama’s stimulus.

Most people do not know that 85 percent of Hong Kongers receive their medical 
care from a system based on the British National Health Service. After the 
British system was taken over by the public Hong Kong Hospital Authority, the 
quality of care has increased and costs have come down. 


Hong Kong's public health system is amazing efficient in that it takes only 3 
percent of the city state's GDP. The 15 percent who pay for premium private 
services add, incredibly enough, another 3 percent of GDP for their medical 
costs.  Comparable figures for the U.S. are 16 percent of GDP (highest in the 
world) and 10 percent for the Canadian equivalent of Medicare.  


Hong Kong has long had the top spot on the Economic Freedom Index, but 
Singapore, which takes upwards of 40 percent in taxes for defense (Hong Kong 
pays nothing), health insurance, public housing, and retirement, is a close 
second.  Four social democratic countries are ranked ahead of the U.S. and 
Denmark closely follows in 9th place.

Contrary to libertarian principles, the economy of Singapore has grown much 
faster than Hong Kong’s: 7.8 percent on average from 1965-2009 compared to 5.4 
percent from 1962-2006. Unemployment in Singapore averaged 3.9 percent from 
1995-2006 in contrast to Hong Kong’s 5.1 percent during the same period. 


Singapore spends even less on health care than Hong Kong does: only 3.7 percent 
of GDP vs. 6 percent for Hong Kong. The quality of care is just as high and the 
health statistics are impressive. Singapore's infant mortality rate is 2.3 per 
1,000 births (2.1 in Hong Kong) while the U.S. rate is 6.4. Foreign workers make 
up 40 percent of Singapore’s population, so one cannot argue that America’s 
ethnic diversity is the reason for its high rate.  Universal medical care at a 
reasonable cost is the key.

Most of children in Hong Kong to public schools based on the British system, and 
most private schools receive government aid. This school system produces some of 
the best students in the world. In 2007 Hong Kong 4th graders scored the highest 
on international math exams with an average score of 607 compared to 550 for 
Americans of European extraction. 


About half of Hong Kong’s residents live in public housing with subsidized rents 
or ownership. While apartments and houses may be privately owned, all the land 
in Hong Kong, even before the Chinese take-over, is held by the government. This 
allows the government to keep land values at artificially high levels and then 
draw huge revenues from them. 


Much has been said about Confucian capitalism and how that it may be superior to 
Western models. Confucian culture, strong even in Buddhist countries such as 
South Korea, Japan, and Vietnam, rejects Euro-American individualism and focuses 
on family values and civic as well as personal virtues.

Surveys, however, simply do not support the claim that the Confucian tradition 
has made businesses or other institutions more moral. According to the rankings 
at NationMaster.com, the least corrupt countries in the world are in Europe, New 
Zealand, and Australia with scores 9.1 and above on a 10-point scale. The 
exception is Singapore with a 9.4 and Hong Kong received 8.3.  The other 
Confucian countries do poorly: Japan (7.3), Taiwan (5.9), South Korea (5), China 
(3.2), and Vietnam (2.6).  The U.S. score is a disappointing 7.6.

Perhaps the people at the World Bank has a simpler answer: "People in these 
economies have simply studied harder, worked harder, and saved more than people 
in other countries."

Nick Gier taught philosophy at the University of Idaho for 31 years. Read the 
full version at www.home.roadrunner.com/~nickgier/HKsing.pdf.



      
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.fsr.com/pipermail/vision2020/attachments/20100729/3b15146f/attachment.html