Andrew Work (April 13th 2007)
Respect for property rights and freedom to enter into lawful contracts underpin our civilization and Hong Kong’s prosperity. Recent discussions taking place in the legislature suggest that some legislators do not fully considered the ramifications of their legislative activism in repeatedly calling to task The Link to account for normal business decisions.
By doing so, legislators:
* Degrade Private Property Rights. Premises under The Link are no longer government property. By impinging on the independence of managers, the legislature is setting precedence for the government to exercise arbitrary power and single out individual firms for political cause.
Indeed, the use of so-called special legislation should not be used as a Damocles sword held over the corporate head of Hong Kong owners and managers to coerce them to toe a populist line. The abuse of political pressure in this manner creates a climate of fear among property owners, big or small.
(Reference: At Your Doorstep. Originally published in the South China Morning Post, 30th March, 2007.)
* Obstruct Lawful Contract Negotiation. Contracts should be negotiated between parties voluntarily and enforced by courts, but not imposed and interpreted by politicians. By introducing political factors into the normal business negotiation, legislators are encouraging rent-seeking behaviors that are inefficient, if not counter-productive. Excessive rent-seeking behaviors will also undermine the robustness of our political and social institutions.
The Lion Rock Institute has two excellent reasons to take a position on this issue.
1. By singling out The Link, the political this may deter future investors from taking a stake in newly privatized ventures (such as the Airport Authority), reducing returns to the government and indirectly penalizing Hong Kong’s hard working taxpayers. The Lion Rock Institute is an advocate of returning assets to the hands of the public and this hectoring sets a discouraging example.
2. This may deter investment in Hong Kong in general. If it is the Link today, why not Citigroup, Starbucks, MacDonald’s or even Mr. Wong’s fruit-stall tomorrow? Increases the political risk appending to all Hong Kong investments will reduce returns and the wealth of all Hong Kong’s people.
We recognize that some legislators, deeply distrustful of the benefits of the market economy, all evidence to the contrary, may prefer these outcomes. However, we hope more reasonable people wish to see Hong Kong free and prosperous, with local and international investors alike happy to invest in Hong Kong to the manifest benefit of our people.
Instead, perhaps the Housing Panel could spend time investigating novel ideas like the one enclosed in the attached essay, How to Unleash Hong Kong’s Dead Capital, from May 2005.
Thank you for your consideration and continued work serving Hong Kong.
By and On Behalf of:
Andrew Work, The Lion Rock Institute