Policies of Free Markets: Neo-Liberalism
Neo-liberalism is the policing of economic liberalization done through increasing private sector role in the economy. The policies include privatization, free trade, free-market capitalism, deregulation, economic liberalization, and reduction of government spending and interference. The belief in the sustained economy often characterizes it to promote human progress through fee markets. Neo-liberalism emphasizes minimal state intervention in social and economic matters. It affords a positive attitude towards the market and shows a negative attitude to the state. Since the market is a crucial resource allocator, Lee et al., (2018) states that it is seen as the basis for economic growth and development. Neo-liberalism enhances self-reliance and guarantees people with real choices of social policies on basic needs such as education, housing, health care, and protection.
Neo-liberalism is the principle ideology of social policy of Hong Kong since it leaves the people to make individual decisions on personal and economic development. The people decide on how best they use their knowledge and skills to improve their living standards. The strategic choices they make affect them, both when there is success or failure (Lee et al., 2018). The ideology has led Hong Kong to economic growth with high living standards and low mortality rates. Through minimal state intervention, markets set terms of exchange and supply, giving individuals a chance to employ effective production and distribution methods. As stated by Lee et al., (2018) the growth of Hong Kong’s GDP was achieved through a fee market, away from government interference.
However, Neo-liberalism has its failures, which outshines the successes. In the process of free markets, the systems create inequality. The ability of the markets to preserve their free competition policies becomes problematic. Rising oligarchs established organizations that dominated significant economic sectors such as real estate, retail chains, construction, transport, finance, and communications (Monbiot 2016). The wealthy individuals amass great wealth that allows them to influence government policies and market decisions. These acts leave other market players with limited entrepreneurial options. With increase inequality, it sparks a decline in manufacture and productivity. The ideology widens the difference in income distribution and economic resources among the wealthy and the low income earners.
In recent times, Hong Kong has experienced a decrease in wages paid to workers, especially in the manufacturing sector. The suppression of worker wages is on the rise due to the increased competition brought by globalization. When one or a few individuals own all avenues of income, they dictate wages and exchange terms, thus gaining the upper hand in negotiating low wages. According to (Rodgers 2018) wages among educated youths has not grown and faced a reduction in some instances. Low wages and income has led to poor living standards in Hong Kong. The government’s push for an increase in education to aid the upgrade of skills to broaden the development gap has led to a further economic and financial crisis. The educated youths joined a highly educated society who cannot find good jobs and end up working for minimum wages. According to (Wong 2021), the wages, even when increased, grow slower than Hong Kong’s GDP.
The cost of living has gradually increased due to high house rents and property prices. The housing policies of Hong Kong tops as the most costly worldwide as illustrated by Castro Campos et al., (2016), marking it challenging to own a home. The housing sector is occasioned by local investors who consolidated lands to extract high rent rates from the rest of the residents. Such acts do not create a free market but a dual economy where international trade remains free. Still, the local economy is in the hands and influence of few wealthy individuals. The accumulation and banking of land by the few individuals have led to a shortage of land supply due to the high prices required for an exchange.
Additionally, consumer commodities such as food and petrol have increasingly gone high than the international average. The high prices lead people to massive debt accumulations. The organization of few wealthy individuals goes beyond controlling the essential goods and services; they scheme to block competition, raise goods and service prices and charge maximum rents on commercial properties and housing units without consideration of other population members.
The beginning of neo-liberalism created an excellent avenue for free trade, free-market capitalism, deregulation, economic liberalization, and minimal government interference. The idea led Hong Kong to economic growth with better living standards and low mortality rates. It allowed the markets to set terms of exchange and supply, giving individuals a chance to employ effective production and distribution methods. Conversely, in the process of free markets, the systems create inequality. Rising oligarchs established organizations that dominated significant economic sectors such as real estate, retail chains, construction, transport, finance, and communications. Such organizations and individuals do not create a free market but a dual economy where international trade remains free but the local economy is in the hands and influence of few wealthy individuals.
The housing policy in Hong Kong is an essential aspect of both individual and economic growth. Housing policy includes the government’s actions that impact the supply and availability of housing, the standards, and metropolitan planning. The government is working on a sustainable housing policy to improve the housing conditions of low earning citizens. However, owning a home makes it hard for any individual in the population to do so comfortably. Castro Campos et al., (2016) state that public accommodation in the state has helped in housing low-income earners. But, due to economic benefit prioritization by the government, most citizens are left in poor housing conditions.
Buying and renting a house in Hong Kong are both unaffordable. Wong (2015) explain that the 40% deposit required to own a home and a further 60% salary deduction towards the same presents a difficulty in owning a house. Equally, rental units are expensive due to the high demand and high rent payments. Even the affordable rental apartments are of poor living conditions subjecting tenants to poor living conditions such as sharing toilets. The lack of rent control and tenancy security and protection leaves the low-income occupants to exploitation by dishonest landlords. Further, those who cannot afford the cheapest units are left homeless. Some landlords develop subdivided units for tenants without the required approvals, subjecting the tenants to hygiene and safety hazards.
In instances of Public housing, Wong (2015) explains that the waiting period of over five years to get a renting flat is long. The application and selection criteria are disadvantageous to young and single applicants, making it even harder to acquire housing. Inadequate housing is a result of poverty, low income and wages. Majority of people living in Hong Kong work on low wages, which can barely accommodate the basic requirement of the person. The high cost and low supply of land owned by few wealthy individuals have created a vacuum for low supply and high demand. It has made it difficult for people to acquire and develop lands, leaving few able and wealthy individuals to exploit the sector.
The economic inequality between the few wealthy individuals and the low-income earners has dramatically impacted the housing policy. The rich explore and exploit the real estate sector and charge maximum rents for their establishments. They are locking out most of the population to access affordable housing. The government’s land usage restriction and regulations require land developers to pay premium costs for the limited leased lands. This leads the developers to set high rates and prices to attain preferred profits. Land and property investment in Hong Kong is attractive and lucrative; hence it attracts foreign investors from mainland Chinese, which creates a high demand for real estate investment. The increased demand attracts highly priced housing properties, which puts it out of reach for middle and low-income earners (Li et al., 2016).
There is a need for rent control and tenancy security and protection. Rent control will ensure fair and affordable property pricing to avoid exploitation by landlords. Further, the authorities should inspect and regulate the subdivision of units to ensure hygienic, and safety measures are followed. The government should provide more affordable housing by increasing the land supply. The process is realistic through land reclamation and creation of huge artificial islands that will give room for more land development. Moreover, Wong (2015) states that the government should impose policies that allow efficient, effective, and equitable land distribution to balance land acquisition and development among its population.
According to Wong (2015) Favorable and fair rates and pricing of owing land should be formulated to enable a less straining plan for land ownership, especially for middle and low-income earners. The authorities can offer tax breaks, incentives, and partnerships that issue flexible credits to developers for the acquisitions, development, or rehabilitation of rental properties for the low-income earners. The collaboration will provide a public-private partnership to ensure affordable housing policies are met in both the private and public sectors. In addition, the government should set and regulate a fair and sustainable minimum wage for workers that will ensure they can afford basic needs such as shelter.
Housing policy includes the government’s actions that impact the supply and availability of housing. Public accommodation model in Hong Kong has helped in provision of affordable housing to low-income earners. But, due to economic benefit prioritization by the government, most citizens are left in poor housing conditions. Rental units are expensive due to the high demand and high rent payments required by property owners. The high rental costs are facilitated by the economic inequality between the few wealthy individuals and the middle and low-income earners, which has dramatically impacted the housing policy. Measures such as rent control will ensure fair and affordable property pricing to avoid exploitation by landlords. Moreover, the government should regulate a fair and sustainable minimum wage for workers that will ensure they can afford basic needs such as shelter.