Bill Stacey, Next Magazine (2015.02.05, Second Opinion)

Over the Christmas break, many of us born in other countries will take the train to a crowded Chek Lap Kok airport to fly to all corners of the planet and spend time with families. It is said that absence (from Hong Kong) makes the heart grow fonder. It also sets the head straight. The land of my birth (Australia) is now mired in a legacy of well-meaning middle class welfarism that undermines independence, self-reliance and families. This has created a massive administrative state that is fundamentally illiberal. It is a fate Hong Kong must strive to avoid.

How did this happen? Australia’s self-image is the home of the fair-go. This identity emerged when John Stuart Mill’s utilitarianism was its guiding policy, and his aim of “the greatest happiness for the greatest number” still seems a good description of how decisions are made down under. However, well-meaning responses to short term practical problems add up to a very different governing philosophy.

Successful restructuring of the economy in the 1980s increased productivity. Along with the resources boom, it created a budget bonanza that became entrenched. The flip side of this success was a monetary policy that became too loose. The resulting inflation not only drove up costs but also asset prices that widened the wealth gap. In response to concerns about inequality, rising cost of living and declining opportunities for the middle class, a range of new government programs were established.

Instead of cutting taxes, which was politically difficult as that could easily be painted as favouring the rich, new benefits were established to promote various vested interests. For instance, childcare for families with children; assistance for the elderly, the disabled, people living in remote areas; training and funding for favoured industries etc. To administer these well-meaning programs is an ever bulging bureaucracy.

More destructive than the fiscal consequences of these programs are the harm they have done to the moral fibre of the community. Rare is a family that does not receive some government benefits. Pride in the independence of the family is eroded. Government policies are arbitrary in nature and a dependence on them is as anxiety-provoking as it undermines the belief that hard work alone would improve one’s future. Putting people at the mercy of an arbitrary administrative state needless to say goes against the fundamental tenets of liberalism that built Australia.

Businesses, too, become dependents of government either as a client or as a regulator. Increasingly policy looks like a zero-sum game with gains from tax reform being offset by losses, while vested interest and an entrenched bureaucracy make cutting government spending incredibly difficult.

In pursue of the marginal voter, governments of both major parties outdo each other with new taxpayer funded programs. It has not taken long for a budget surplus and much economic vitality to be squandered. Despite the promise of security from this administrative state, people do not feel better off. Privilege and a sense of entitlement rather than fairness seem to be the result. Recently even cautious attempts at reform have seen governments totter and some fall.

Home to Hong Kong from Australia, there is little wonder to our continued standing at the top of economic freedom rankings: it comes down to the still relatively small size of government. The touch of our administrative state remains light, taxes remain low and although much of the population is housed by arms of the government, livelihoods of families are driven by work rather than provided by the government.

We do not fear standing up to the government and assert our fundamental rights independent of administrative diktat. The private and personal sphere of our families, civic associations, churches, temples and friends are larger than the political and administrative realms.

Irrespective of political arrangements, keeping the size of government small in what it takes and what it gives or redistributes, is the only way to preserving our city as Milton Friedman’s last bastion of capitalism.

Bill Stacey