Question

a. Explain why Milton Friedman commented Hong Kong is a model of free market and laissez-faire system?

b. Applying the ideas of John Kenneth Galbraith, and supporting with empirical data, discuss why people argue that the Hong Kong SAR Government should intervene the free market system?

(Total 1000words)

Answer 1

Once a tiny colonial of 6,00,000 people with very less assets, Hongkong per capita income was one-quarter of average income of Great Britain. That time Britain went for Socialism economy and Hongkong went for Laissez -faire system where there is no tariffs and low taxes. In 1996, Hongkong free economy had one-third larger percapita income than Britain, Hong kong's Laissed Faire system outperfomed Britain's Socialism. Friedman noted that there are complcated relationship between economy, civil and polital freedom. Hong kong had almost complete economic and civil freedom but no political freedom.

Followed by a historical analysis which shows due to different politcal, social and economic changes we can reach two different economic status with different economic approaches. Although poltical,social and economic changes may manifest differently at different times ,it will ultimately force democtratic governments into adopting a hybrid economic approach into adopting free market with interventionist stretegies.

After ,1997 the Hong kong government, interven heavily on both money and stock markets to defend against the attacks. This caused economic downturn , which led the government to apply expansionaery fiscal measures to revive the economy.