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Technology Stocks : George Gilder - Forbes ASAP
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To: Hiram Walker who wrote (144)10/2/1997 6:42:00 AM
From: Jess Beltz   of 5853
 
Mr. Walker, your assessment of Japanese culture is very astute, and leads me to make a further comment about the tax structure here (I live and work in Hong Kong.) It is true that Hong Kong has a (nearly) flat 15% tax rate, but those who draw implications about the wealth of Hong Kong in light of that fact miss several important points.

(1) Hong Kong is one of the most densely populated and very small regions on the planet. This means that per capita expenditures on infrastructure development are very small, and much of that is bid out to private contractors with rights to future revenue streams (see the MTR and various tunnel projects, for example.)

(2) In line with your comment about Japan, Hong Kong does not have any entitlement programs on the order of Social Security. The result is extended families of 7 or 8 people living in 750 square foot apartments in conditions that by any standards but those used by the inner-city destitute would simply be unacceptable and are in fact nearly entirely alien to western culture.

Finally, Milton Freedman (who visits very occasionally) is fond of pointing to Hong Kong as an example of the importance of a free market economy. I would bet that he has never talked to any small entrepreneur trying to make a go of a business venture here. This economy is in fact not at all free in the sense of businesses here having to compete on price and quality. The economy carries with it a how-we-do-business subculture that rigs it from top to bottom based on connections, and in all but the most trivial comodities, prevents consumers and suppliers alike from being anything close to elastic.

Jess Beltz
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