The Free Market in Hong Kong
In a reply to a recent mises.org weblog posting someone posted a challenge- Would anyone be so kind as to tell me in which countries poverty was eliminated by means of your (Austrian) enlightened theories?..." the author of the original post replied with several good examples, without discussing any specific details of how these countries managed to succeed. Here are some of the specifics from one particular free market success story.
After the Second World War Hong Kong had no minimum wage, low and simple taxes, zero tariffs, aero capital controls, and a stable legal environment. The government in Hong Kong invested in its seaport and public education, but public spending ranged from 13-19% of GDP. Hong Kong has also avoided accumulation of public debt. Hong Kong actually ran budget surpluses in 32 years between 1948 and 1985. Hong Kong is an excellent example of a free market-limited government society, but how well did this example of laissez faire work?
At the end of the Second World War per capita income was 180$. BY 1982 the per capital income of Hong Kong was 6,000$. Even the lowest 20% of Hong Kong households reached 1300$ per capita income by 1976- seven times the average income just after the war. From the mid fifties to the 1970's Real wages in Hong Kong more than doubled, and unemployment fell below 3%.
From 1948 to 1960 Hong Kong's GDP grew at a rate of 7% per year. From 1961 to 1980 Hong Kong's GDP grew 9% per year. From 1979 to 1984 Hong Kong's GDP grew 7.6%, despite a worldwide recession. All of this happened without foreign direct aid of any kind.
Postwar Hong Kong went as far with economic laissez faire as any other country in history. This resulted in economic development that benefited virtually all the people of Hong Kong. Living standards increased substantially even for the poorest people in Hong Kong. There are other examples too, like postwar West Germany. The architect of the postwar Wet German 'economic miracle' was Wilhelm Ropke. Ropke was influenced by the writing of Ludwig von Mises, so the success of laissez faire in postwar West Germany can be directly attributed to Austrian Economics. This is only one example, but economic freedom indexes provide further evidence of the success of laissez faire economics.