REGULATION — Interview with Laurence Pak

Laurence Pak of the Lion Rock Institute talks about freedom, regulation and institutions in Hong Kong.

Photo: Laurence Pak

Hong Kong based liberty activist Laurence Pak serves as the Director of Operations at The Lion Rock Institute, which calls itself “Hong Kong’s only free-market think tank”. Before this he made a career in the financial sector. Moritz Gillmair interviewed him about the value of the free market and the unique circumstances that made Hong Kong what it is today.

Moritz Gillmair: What do you think is the most important factor for Hong Kong’s rapid development from a third-world country to one of the most prosperous places in the world?

Laurence Pak: Indeed, Hong Kong grew from what is basically a fishing village into one of the most wealthy and densely populated cities in the world. This is due to the fact that during the entire history of Hong Kong, we have always had a unique and different political and economic system from our “mother country”, that is China. The system of low tax, zero trade duty and limited government in Hong Kong is recognized as Positive Non-Interventionism. Looking at the writings and the records of our founding father, i.e. Dr Sun Yat Sen, we would know that he picked Hong Kong as his base during the revolution for a specific reason: because he appreciated the freedom that already existed here in Hong Kong at the end of the 19th century.

The different systems that were employed by Hong Kong and mainland China throughout the 20th century again show how they complemented each other. Hong Kong always remained an open trading port and financial centre throughout the development of our mother country. Our previous leader Mr Deng Xiao Ping understood this very well. He publicly noted that the system in Hong Kong, i.e. capitalism, complemented the socialist policies that were employed during the 20th century China. He wanted this system in Hong Kong to remain in force after the handover of Hong Kong back to China in 1997, therefore the “One Country Two System” policy was established to maintain just that.

Do people in Hong Kong realize the impact free markets had on their well-being? Are free markets actively embraced by society or rather seen critically?

Like anything which is free, most of the time we feel the pain only when we are being deprived of it. In general most people in Hong Kong will agree that we are slowly losing our freedom. However as with most other places in this world, most people fail to see this loss of freedom comes from bad government policies, and most people still look to the government, which is the source of the loss of freedom, to find a cure. So the vicious cycle never ends.

However, there are some glowing exceptions. When Uber entered Hong Kong in 2015, it was seen as a clear example to everyone in Hong Kong that the market can provide effective solutions against a state-sponsored monopoly. (Note: no new taxi license was granted for the last 20 years in HK) However the government has still not done anything to deregulate the market, fearing the backlash from the taxi license holders.

Hong Kong sounds like a libertarian dream come true concerning its economic freedom. However, being in HK it felt that the government is paternalistic in some aspects. In subways there are screens everywhere that tell you how to behave properly and there are horrendous fines for littering or smoking. Is my perception that nudging is widespread in Hong Kong correct or not? If so, how could that be explained?

You are absolutely right to note of the paternalist warning signs in our subway system. That’s one of my pet peeves! I personally think there is a huge conflict in our culture: on the one hand children are taught to study hard, and prepare well so they can have a bright future and accomplish something, and on the other hand, we are constantly taught to listen to our elders and following their instructions. There is a huge conflict between this mindset and an individualist libertarian mindset. I think the traditional mindset is slowly being rejected.

Could you shortly explain how the political and economic relation between Hong Kong and China looks like?

The Mainland-Hong Kong conflict is the biggest source of political tension in Hong Kong. Basically Hong Kong people do not trust that our political leaders both in Hong Kong and in mainland, have Hong Kong’s best interest in mind.

Recently there have been large protests demanding Hong Kong’s Independence. What is your stance on this idea?

I am myself neutral, because I value freedom highest. Independent Hong Kong or not, it is much more important to protect the freedom that still exists here in Hong Kong, needless to say if we can try to expand it.

Where do you see Hong Kong in twenty years from now? Will it be an even freer place to live or not?

I am fairly optimistic. While I cannot really predict how our lives will be like in 20 years time, I believe that people of Hong Kong have faced adverse conditions and it has only made us stronger. I think that our institutions have more flexibility to face a changing environment than any other countries. I think a much more meaningful question to be asked is if the EU or even the United States of America will still exist in 20 years! 🙂

Moritz Gillmair studies at the University College Maastricht and is president of Maastricht Students For Liberty.