Hong Kong doesn’t prove what you think it proves

Conservatives often make the following argument:

Both democracy and freedom are important, but freedom is more important. Look at Hong Kong. It has freedom but is not democratic. It does much better than many other places that have democracy but lack freedom (or lack the rule of law.)

That’s certainly a defensible argument, but it’s weaker than it looks.

I’m going to compare Hong Kong with the city that is most similar—Singapore. Both are city-states (although of course HK is technically a part of China.) Both have populations in the 5-7 million range, and very high per capita GDPs. Both are mostly ethnic Chinese. Both are financial and trading centers. They are #1 and #2 in every single index of economic freedom. But both have heavy government involvement in the housing sector.

However, there are key differences. While Singapore is far from being a perfect democracy, it’s certainly more democratic than Hong Kong. And while Hong Kong doesn’t have a perfect record on civil liberties, it’s freer than Singapore.

I’d like to suggest that Hong Kong’s current problems would not exist if it were even as democratic as Singapore. Singapore does tilt the playing field in favor of the ruling party, but the Singapore electorate is perfectly capable of voting them out if office if they get sufficiently angry. Importantly, the Singapore government knows this, and makes sure that the electorate doesn’t get sufficiently angry.

You may wonder why the Hong Kong protestors remain so angry, even as the Lam government has completely given in on their initial demand to abandon the extradition treaty with Mainland China. The anger seems fueled by many issues, but two stand out:

1. The lack of democracy in Hong Kong.
2. HK government policies that intentionally keep housing extremely expensive, and which dramatically reduce living standards for residents of Hong Kong.

In Singapore, the government allows elections as a sort of safety valve, and also as a way of gauging public sentiment. As the share of votes for the opposition party gets closer to 50%, they take steps that will be politically popular. They have much more pro-development housing policies:

Since the handover the [HK] tycoons have come to dominate not just the economy but also government, opposing calls for more democratic representation, a more generous welfare state and, of course, a programme to build mass, cheap housing of the kind that Singapore has long promoted (and used to keep voters quiescent). Part of the tycoons’ clout comes from their contribution to Hong Kong’s finances: 27% of government revenues come from land sales. Since the start of the crisis Hong Kong’s chief executive, Carrie Lam, has not met any democracy activists, but she has consulted with several plutocrats.

If Hong Kong were even as democratic as Singapore, the Lam government would have been forced to adopt a more expansionary housing policy, freeing up lots of new land for development. Although Hong Kong may seem crowded to tourists, there is actually plenty of land to house its population of 7 million, if the government were not artificially holding back development to boost the profits of property development firms.

Of course there are lots of other democracy comparisons one can make. The two Koreas. China vs. India. China vs. Taiwan. Etc. But if you want to use the example of Hong Kong to form your views on the relative importance of democracy and liberty (as many pundits have done), the actual lesson is that democracy is more important, more fundamental. Hong Kong’s closest comparison country, by far, is Singapore, which is somewhat less free and somewhat more democratic. And Singapore is also more successful than Hong Kong in providing a decent quality of life for its residents.

Look at the following picture.  Can you guess which part of the picture is Hong Kong and which part is Mainland China?



33 Responses to “Hong Kong doesn’t prove what you think it proves”

  1. Gravatar of John Arthur John Arthur
    24. September 2019 at 14:00

    Great post Scott. I didn’t know that the HK government was restricting supply of housing on purpose, since I had always thought of HK as very successful in all aspects. Do you think China is the one behind HK housing restrictions, as making HK less successful on purpose makes their rule more comparatively successful?
    Cause people wouldn’t be too happy with the CCP is HK was as rich as Singapore…

  2. Gravatar of Lorenzo from Oz Lorenzo from Oz
    24. September 2019 at 15:16

    Yes. Accountability matters over time. This is why I am cool with sacrificing a bit of economic freedom for more accountability. Especially as accountability will tend to circle back to economic freedom …

    As in the argument for Brexit …

  3. Gravatar of ssumner ssumner
    24. September 2019 at 15:21

    John, The restrictions were in place long before 1997.

    Lorenzo, Yes, that’s the strongest argument for Brexit. But not hard Brexit.

  4. Gravatar of John Arthur John Arthur
    24. September 2019 at 16:36

    Thanks Scott. I always wondered why Chinese democracies have so much economic freedom. Western Europe has more socialistic governments. Do you know of any plausible explanation?

  5. Gravatar of Benjamin Cole Benjamin Cole
    24. September 2019 at 16:44

    I agree with most of this post. The housing angle in Hong Kong is extremely important, and has ramifications for how voters on the West Coast of America will proceed. Trump, AOC, and Sanders may be the first of a long line.

    I do wonder about surveys that conclude Singapore is a very free economy and so forth. Paul Krugman once described the Singapore economy as “Stalinist.”

    Economists in Singapore author peer-reviewed reviewed papers that government influence and control in Singapore is pervasive, and also it is the policy of the government to obtain current-account trade surpluses. The result of this extraordinary intervention by government into the economy of Singapore is a per capita PPP 50% higher than that of the United States.

    But Singapore is a city-state, and so the lessons there may not apply to a larger nations such as the United States.

    Perhaps we should have a world of city-states.

  6. Gravatar of Benjamin Cole Benjamin Cole
    24. September 2019 at 16:57

    OT, but in the ballpark…

    “The Fed pumps another $105 billion into markets, continuing its streak of capital injections”— headline today from Business Insider.

    Oh, that? Another $100 billion or so of QE? (in one day).

  7. Gravatar of A Hong Konger A Hong Konger
    24. September 2019 at 17:53

    > The anger seems fueled by many issues, but two stand out:

    > 1. The lack of democracy in Hong Kong.
    > 2. HK government policies that intentionally keep housing extremely expensive, and which dramatically reduce living standards for residents of Hong Kong.

    Only one of the 5 demands is about democracy and universal suffrage. The housing issue is not even a part of it. Currently, the anger is fueled by police brutality and the lack of accountability by Carrie Lam and the government.

  8. Gravatar of ssumner ssumner
    24. September 2019 at 19:44

    John, Hard to say. Obviously mainland China doesn’t have a lot of economic freedom, so there’s no simple cultural explanation.

    Hong Konger, I understand that, but just because an item is not on the list doesn’t mean it’s not a source of discontent.

    I support the protesters, but if I thought these protests were about police brutality then I would not support them. That’s not a big enough issue to justify this movement. It has to be mostly about democracy. And a lack of democracy contributes to the housing situation.

  9. Gravatar of ssumner ssumner
    24. September 2019 at 19:46

    Ben, You said:

    “Paul Krugman once described the Singapore economy as “Stalinist.””

    So tell me, every time Krugman says something idiotic do you feel a need to mindlessly parrot the comment?

  10. Gravatar of John Arthur John Arthur
    24. September 2019 at 20:18

    Scott: Well, China has become fairly economically free in the last few years, I would rank it much higher than Heritage does. At least, building regulations and regulations on tech and biology are extremely low, and those matter alot. Also the Chinese population is moving toward cities like Shenzhen which are very economically free.
    One thing that confuses me is that East Asians aren’t extreme outliers in the West, especially in USA where they are mediocre in terms of Asian Immigrant performance. Yet, East Asian countries do exceptionally well. Yes, there is self selection for the Indians and Filipinos, but is also true for the East Asians, especially the Chinese.
    What do you think Scott? Are you optimistic about the Indians and Filipinos, or did the US get massively lucky with the self selection of immigrants?

  11. Gravatar of BC BC
    25. September 2019 at 00:09

    Democracy is one means of trying to secure freedom but is not the end in and of itself. Freedom is the end. I think that’s the sense in which people claim that freedom is “more important” than democracy, i.e., that democracy is important primarily to the extent that it helps secure freedom.

    In the case of Hong Kong, the housing restrictions are limits on economic freedom. So, that’s not a very good example of how democracy might be more important than freedom. Would the housing restrictions be better if they were enacted by an elected government, say like in San Francisco? The argument that Hong Kong would have fewer housing restrictions if they had democracy does not really contradict the claim that democracy is important primarily as a means of securing freedom rather than as an independent end.

  12. Gravatar of Christian List Christian List
    25. September 2019 at 02:50

    Good, suprising post overall but the opening seems a bit stretched. Which “conservative” would say such a thing? Do you have any names?

    Looks like a straw man to me, for example in order to distract from the fact that democracy deficits in Hong Kong have not been your favorite topic so far. So now this conservative straw man. Well played Scott, well played.

    The dichotomy seems artificial as well. Democracy is an essential part of freedom, so who would separate the two things. If there is no freedom of opinion, no freedom of the press, no Rechtsstaat, no democracy, then what liberties are left? The freedom to use your own bathroom?

    although of course HK is technically a part of China”

    For you, that wording is progress. I might use this phrase in the future. It’s a good choice on several occasions: HK, technically a part of China. Tibet, technically a part of China. Taiwan, not even technically a part of China anymore.

  13. Gravatar of Benjamin Cole Benjamin Cole
    25. September 2019 at 03:13

    “Ben, You said:

    “Paul Krugman once described the Singapore economy as “Stalinist.””

    So tell me, every time Krugman says something idiotic do you feel a need to mindlessly parrot the comment?” –Scott Sumner

    Oh, come. Paul Krugman is a highly intelligent fellow, with whom I sometimes, perhaps even usually, disagree.

    Krugman does have a way with words, and he summed up the Singapore economy neatly, if with some hyperbole.

    Besides, I do not “parrot.” Parrots do not wear tin-foil hats.

  14. Gravatar of dtoh dtoh
    25. September 2019 at 05:04

    Or it might be HKers don’t want to be ruled by a government that puts people in concentration camps.

  15. Gravatar of rayward rayward
    25. September 2019 at 05:33

    More than three-fourths of the land in Singapore is owned by the state. Does that facilitate or hinder affordable housing?

  16. Gravatar of Ewan Ewan
    25. September 2019 at 08:00

    Is it not the case that ordinary people do better in neighbouring mainland cities?

    And is it not the case that mature democracies like the US do not notably favour ordinary people v. those who fund political campaigns? (I think there is even statistical analysis of this by academics – I forget the details of the relevant papers. Government policy reflects the concerns of donors rather than what opinion polls indicate are the concerns of the electorate. And this holds regardless of which of party is in office.)

  17. Gravatar of Calvin Calvin
    25. September 2019 at 08:56

    HK govt policy on housing plays part of the role. but the housing problem is partly a result of “democracy”. HK govt try to get more land to build, but democracy (interest group lobbying) prevents that to happen. look at the development of land reclamation in the Lautou Island. environmentalists and locals against that. look at the controversy to develop the golf court, it is the interest group putting all proposals to end.

    look at San Francisco as well. it is the existing landlords to prevent building through the democratic process.

  18. Gravatar of ssumner ssumner
    25. September 2019 at 09:20

    John, I certainly don’t agree with the claim that China’s economy is exceptionally free.
    Maybe freer than Heritage says, but nowhere near as free as other East Asian countries (outside North Korea.)

    You said:

    “Yet, East Asian countries do exceptionally well.”

    That’s really only true of Singapore. Japan, Korea, Taiwan, etc. are just ordinary developed countries.

    BC, You can say Hong Kong’s not a good example, but it’s precisely the example that’s been cited for years by people who think freedom is more important than democracy. But as we see today with Singapore and Hong Kong, that’s not necessarily true.

    Christian, When are you going to stop apologizing for the brutal human rights abuses of Trump’s buddies? Haven’t you seen the sickening pictures out of Yemen? What about Russia’s action in Ukraine? What about Egypt? The Philippines? Why doesn’t Trump say anything?

    “Taiwan, not even technically a part of China anymore.”

    Actually it is. Check Taiwan’s constitution. It defends the one China policy. So Taiwan and Beijing agree, as does the Trump administration.

    Dtoh and Ewan, You said:

    “Or it might be HKers don’t want to be ruled by a government that puts people in concentration camps.


    “Is it not the case that ordinary people do better in neighbouring mainland cities?”

    What if there were a blogger who didn’t have blinkers on, and could see both sides of the picture?

    As for the mainland cities—what percentage of the ordinary people in the Pearl River delta are migrant factory workers? Ask them if they are better off than Hong Kongers.

    As for concentration camps, in the past you’ve said we shouldn’t trade with China.
    Should we economically boycott all nations with horrific human rights abuses? Including North Korea, Cuba, Vietnam, Saudi Arabia, etc.?

    Ben, You said:

    “and he summed up the Singapore economy neatly”

    Stalinist? Sure, whatever you say. It’s a MoneyIllusion comment section–people say the craziest things.

    Rayward, It’s not about who owns the land, it’s about how it’s managed. Hong Kong’s government also owns the land, but Singapore does a better job managing it.

  19. Gravatar of Carl Carl
    25. September 2019 at 09:47

    The Conservative argument I had heard regarding Hong Kong was that they lacked democracy, but freedom was still protected by an independent judicial system. This argument is in line with the Founding Fathers’ belief that an independent judicial system is as important a bulwark against tyranny as democracy. Considering what triggered the recent protests in Hong Kong, I would say that Hong Kongers agree with the Founding Fathers.

  20. Gravatar of Lorenzo from Oz Lorenzo from Oz
    25. September 2019 at 14:50

    Actually, I think hard Brexit is the best exit deal that the UK is going to get and it will actually be in a better negotiating position for a new arrangement when it is clearly out, than in this ridiculous limbo, given that the incentives on the EU side are so strongly to punish.

  21. Gravatar of Christian List Christian List
    25. September 2019 at 16:25


    I’ve addressed your points before. I do it again, asap. Currently it is only very late and I am very tired, but I won’t forget it.

  22. Gravatar of msgkings msgkings
    25. September 2019 at 21:40

    @Lorenzo: terrific comment, +1

  23. Gravatar of Pyrmonter Pyrmonter
    25. September 2019 at 22:25

    @ Lorenzo and @Scott

    But which way does democracy move house prices? In both the UK and Australia, the ‘house price vote’ is proving sufficiently strong to prevent the sorts of measures that would allow house price deflation; instead, both countries see limited new building and a steady price increase. As ever, democracy may be better than all the alternatives, but it creates problems.

  24. Gravatar of Pyrmonter Pyrmonter
    25. September 2019 at 22:28

    Oh, and @ Lorenzo on Brexit – indeed.

    I wonder sometimes whether it is only Australians – people who live in a (fairly) open, mid-sized advanced economy that, almost uniquely, is not part of a trading block (South Korea and Taiwan are the others) – who ‘get’ the point of Brexit, and that it is not some calamity, as the UKSC, the Remain vote in the UK and the Tory rebels seem to imagine. They’d be better to do a deal; but they’ll never do a better one that May’s (exit in name only) if they have no alternative.

  25. Gravatar of Ewan Ewan
    26. September 2019 at 02:32

    Prof. Sumner
    Not point-scoring – trying to learn. OK, so comparing one Chinese port city with another was daft of me: HK British and authoritarian for 150 years and then ruled by plutocracy; rest of China still in transition from rural to urban, and authoritarian. Is that a fair cartoon version? How does rest of China get to HK/Singapore economic level bypassing influx of poor into cities? And what is a feasible path to liberal democracy?

  26. Gravatar of dtoh dtoh
    26. September 2019 at 02:36


    You asked, “Should we economically boycott all nations with horrific human rights abuses? Including North Korea, Cuba, Vietnam, Saudi Arabia, etc.?”

    No. Just those who are economically and militarily powerful, threaten their neighbors, and have the potential to wreck civilization for the rest of the world. And I would not just boycott them, I would also boycott anyone who didn’t join the boycott.

  27. Gravatar of Steven Kopits Steven Kopits
    26. September 2019 at 09:31

    The issue is not democracy versus freedom, it is the means by which executives and legislators are chosen versus the governance they deliver.

    In the US, we have traditionally spent way too much time on democracy — how representatives are chosen — and far too little time on governance.

    Governance is not about freedom, but about managing a portfolio of ideologies, most notably egalitarian, liberal (freedom) and conservative. All of these ideologies have their place.


  28. Gravatar of ssumner ssumner
    26. September 2019 at 14:55

    Carl, Yes, that legal independence was the original complaint. But as I pointed out it’s not the current issue, which is democracy.

    Lorenzo. Don’t you think Norway and Switzerland and Iceland are doing fine with the current half in/half out status?

    Christian, You have never condemned Trump forcefully enough to my satisfaction,
    That’s all that matters. It doesn’t matter if you condemn Saudi or Russian human rights abuses 100 times, if it’s not strong enough to satisfy me then that means you are an apologist for the tyrants.

    Did I get it right? I don’t want to misrepresent your views on “shaming”.

    Pyrmonter, First of all, leave me out of the “Brexit is a disaster”: club, I’m not a member. I’ve always thought it was a close call.

    Housing laws are all over the place. Germany and Japan do well, the UK and Australia not so well. All four are democracies. Hong Kong does worst of all, and it’s not democratic. My point is that Hong Kong doesn’t show what people thought it showed, if you use the most plausible comparison country (Singapore.)

    Ewan, I don’t follow your question. Sure, there will be an influx of poor into the cities. I’m not saying China isn’t making great progress, I’m saying the level of living standards in China is still below HK.

    dtoh, China is probably the least aggressive great power in world history. And yes, I’m including the US. We’ve invaded plenty of countries, while China has 70 year history of almost no invasions other than a few trivial border disputes that didn’t amount to much (India, Vietnam, Russia, etc.). They don’t go out and invade places like Grenada, Panama, Dominican Republic, Iraq. In contrast, Saudi Arabia attacked Yemen and is inflicting horrific human rights abuses there. And yet no one seems to care.

    If you are going to argue for sanctions against China, it has to be their human rights, which really are bad. Maybe if China actually did invade some place like Taiwan you could make a foreign policy boycott argument. Otherwise it’s just implausible. Countries don’t get sanctioned because they might invade countries at some distant point in the future, they get sanctioned for actual behavior.

    BTW, Boycotting China would cause a global recession, due to interrelated supply chains. And history shows that sanctions don’t lead to better behavior in non-democratic states.

    Now Russia really is a threat to its neighbors, invading places like Ukraine and Georgia. That’s what hawks should focus on. But then Trump keeps saying we need better relations with Russia.

  29. Gravatar of dtoh dtoh
    26. September 2019 at 16:54


    1. Not being able to invade other countries is quite different than not wanting to.

    2. World recession would be an excellent trade off versus world destruction.

    3. I don’t favor sanctions to correct human rights abuses/behavior, I favor it to prevent illiberal and non-democratic states from building up the economic power and military might needed to militarily dominate other countries.

    4. Having not recently invaded foreign countries is not meaningful. Once a country starts invading other countries, it’s because they have already developed the economic and military power to do so. Sanctions at that point are too late.

    5. Russia is a minor economic power.

    Let’s see here…
    – Sham elections/referendums
    – Militarily threaten virtually every neighboring state
    – Put religious/racial minorities in concentration camps

    Remind you of anything?

  30. Gravatar of P Burgos P Burgos
    26. September 2019 at 21:47


    I find it difficult to imagine China starting major wars (with Taiwan being the one exception). Because why would Chinese leadership want to do that? What upside would there be in it for them? Wars that don’t go well are one of the main drivers of intense discontent among the masses. Why would China’s leadership risk that kind of internal instability for a war that doesn’t do much of anything for their core geo-political interests?

    That is to say, the leaders of China aren’t saints, they simply aren’t blindly stupid.

  31. Gravatar of Carl Carl
    27. September 2019 at 10:29

    But the Hong Kongers didn’t push for democracy until their judicial system was threatened. Given that, I’m not sure that Hong Kong disproves the Conservatives’ argument.

    That said, I think Hong Kong provides fodder for both sides of the argument because I think the two variables–liberty and democracy–are not independent of each other. Hong Kong may have maintained an independent and fair judicial system because the government overseeing Hong Kong before the handover, the UK, although not accountable to the Hong Kong electorate, was still accountable to an electorate in a free society. That said, colonialism has a pretty lousy history. There are also examples of healthy functioning democracies that were midwifed by nasty dictators (e.g. South Korea, Chile, Spain). Some places have collapsed into hellholes at the hands of democratically elected governments(e.g. Venezuela, Iraq).

    The truly conservative argument recognizes the interdependence of the variables, recognizes that you need a strong government that is kept in check by a variety of non-government institutions, enough social harmony that politicians and their followers do not fear that loss of an election leads to loss of their lives or freedom, a level of economic development and an independent judiciary.

  32. Gravatar of ssumner ssumner
    27. September 2019 at 16:48

    dtoh, Russia is a bigger military power than China, and is actually invading other countries. Why not sanctions on Russia?

    Sanctions do not make other countries behave better, they behave worse. Look a history.

    How is China going to cause world destruction? Are they going to attack us with nuclear bombs? The truth is that neither country has any incentive to attack the other, and never will. It would mean the death of hundreds of millions in both countries. It’s why even the Soviet Union (a far worse government than China) never attacked us.)

    You said:

    “Militarily threaten virtually every neighboring state”

    This is literally true of the US. Not “virtually”, every single one! We attacked both Mexico and Canada. Yes, that was a long time ago, but China is not currently threatening any neighbor that is not regarded by the US as part of China. Not one. (I.e. Taiwan is the only one they are threatening.) And Trump’s sanctions make an attack on Taiwan far more likely, as it’s giving the hardliners in Beijing the upper hand. Did our 1930s sanctions on Japan prevent war? Or make it more likely?

    “Put religious/racial minorities in concentration camps”

    We once put ethnic Japanese in concentration camps. Did that make us a threat to world peace in the 1940s?

    Obviously there is nothing we can do to stop the rise of China. They have the world’s number 2 “Silicon Valley” in Shenzhen, and it’s only a matter of time before their GDP is three times as large as ours. We are better off trying to live with them peacefully. Trade, not war.

    Carl, You said:

    “But the Hong Kongers didn’t push for democracy until their judicial system was threatened.”

    Not really true (recall 2104), but otherwise I mostly agree with your comment.

  33. Gravatar of Lorenzo from Oz Lorenzo from Oz
    30. September 2019 at 16:56

    Re Norway et al. Their deals were negotiated on the basis of hoping to eventually entice them in. Not quite the situation the UK is in.

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