A Libertarian Look at the Housing Problem in Hong Kong

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One of the “oftenly” asked questions about Hong Kong’s capitalism thrown at us libertarians is housing. Hong Kong, the Heavenly Land of Capitalism on Earth, has very expensive houses. They are so expensive that some people are forced to live in 6×2 ft “cages”, while the luckiest cannot even share a room with their couple once they marry, both spouses having to live in the house of their respective families. My bedroom in Hong Kong has barely 2×2 meters, and the whole flat is not bigger than my dining room in Spain. So, is this the result of capitalism? Cronyism? Socialism? Communism? Aliens? Do we need more government intervention?

As I showed in a graph before, there is a correlation between the housing prices of Hong Kong and the legislatures of Donald Tsang and CY Leung, suggesting that the current situation is not the result of real capitalism, but of state intervention. In Hong Kong, like in China, the state can basically steal your property (house) and demolish it to build new houses if there is demand. And there is demand for two reasons: because Chinese immigrants are moving to Hong Kong, and because Chinese immigrants invest by buying many houses. Of course, immigrants have the right to move to any place they like and buy a house there, but they do not have the right to steal someone´s else house to establish themselves there –or to do it thrown government intervention.

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There is a simple solution to the housing problem in Hong Kong: privatization. Real privatization without state intervention. If we remove the rights of the government on the land and their monopoly on land development, the problem would vanish immediately. Right now, immigrants enter Hong Kong and ask for a house, so the government raises taxes (steals more money from you!), uses this money to compensate the displaced people whose house they destroy, and then build new ones for the newcomers with the remaining funds. The result is small houses at higher prices, or public houses at a lower rate (don´t be naïve: in fact you are paying the difference with your taxes). The government always has a monopoly on violence, so any illegal activity the government does –demolishing, taxation, etc.– becomes legal only, and only if the government does it. Simply said, you cannot steal money from your neighbor or demolish his house to build a new one. Only the government can.

So let´s remove the government from the equation and, for the time being, let´s give it one and only one function: to protect the property rights of the people. Land development would be in the hands of private companies and entrepreneurs who would try to persuade the people to give up their land. But they would never be able to take it from them by force –they would, or at least could, be punished by the government or by private security forces (aren´t you paying taxes for that?).

Likewise, private companies would compete in the market to offer the best price and the best conditions, and could even agree with some residents to improve the housing of the villages without destroying them –for example, building small blocks that would not alter the landscape, instead of high-rise buildings. The residents would not only maintain their house, but they could see it improved for free since the land development companies could easily amortize costs selling the new built rooms to other families.

This would also solve another problem: Chinese immigration. If companies cannot provide so many houses to supply Chinese demand, less Chinese immigrants would establish themselves in Hong Kong. Hong Kong is not a small place, but it is very small when compared with China and it cannot sustain the actual rate of Chinese immigrants without having a negative impact on the lives of its citizens –whether Hongkongers or not.

Of course, none of this is going to happen since the legislative council is just an extension of the executive power under CY Leung, which in turn is an extension of the Chinese government. I wonder if there is even a scheme behind all of this –a planned invasion to eradicate Hong Kong´s identity and values in favor of Chinese government ideology. Is this a crazy thought? Maybe. But let´s keep in mind that the Chinese government has been boosting immigration from Mandarin speaking and Han ethnic zones into provinces with Southern dialects and ethnic minorities for a very long time. Their attempt to replace Tibetans, Uyghurs, Hui, Miao, and Yi, among other ethnic groups, could be just the beginning.

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