>Chris,
> There was an attack on the HK $ last fall. That was
>the immediate precipitator of the one day 700+ drop of the
>Dow-Jones Index, largest ever in absolute terms, but not in
>relative terms. The defense came through massive interest
>rate hikes that were tanking the Hang Seng (actually it was
>the latter that hurt global stock markets, FTSie got kicked
>too, if I remember, as did Nikkei, DAX, and the rest).
>Those were carried out largely on orders of the PRC
>authorities and they also tanked real estate prices (that
>is of the land lease prices).
>Barkley Rosser
OK. I was just going to give up and say we need more information when I thought I would ring up my informant, mentor, supervisor, friend, or comrade, and get further information. He is a quietly confident soft-spoken Yorkshireman, and I am putting my money on him rather than on your sources, which I suspect are secondary or tertiary readings of commentators, admirable though the detail is that you bring to other debates.
BTW I do not want to have a go at Barkley as such, because I appreciate his engagement but I think he demonstrates a much wider resistance to the consideration of serious structural reform of the capitalist system that would weaken the system significantly. Why this resistance? I suspect part of it is the ideological pressure of the university system that makes it safer to be worldly wise and somewhat cynical about the possibilities of change rather than arguing a case that could be made to appear academically ridiculous and throw one's position in the department in doubt. I have the advantage in this debate of not being an economist. There are no penalties for being stupid.
On the other hand "serious" revolutionaries will not discuss reforms at all.
But, dear comrades and friends, my informant reminds me that the first measure mentioned in the Communist Manifesto, as pretty generally applicable in the most advanced countries, is
the "Abolition of property in land and the application of all rents of land to public purposes."
That is the system that is alive and well and healthy in the former imperial and decidedly non-socialist colony of Hong Kong.
It is far from impossible.
But least I argue from long forgotten holy script, let me go back to the concrete reality of the exchanges.
Barkley reminds us of the fall in the Hang Seng and the shudder round the world. (He will have to explain to me what tanking means) But he alleges that massive interest rate rises were largely carried out on the orders of the PRC authorities. What evidence does he have of this?
My information is that the Hong Kong government has no power to set interest rates. It does not even have a monetary policy committee as the Bank of England has now. The interest rates are set by the market and the rise in interest rates was the response of the market to the sudden drought of good credit. It was not so much a defence as a self-regulatory system.
Furthermore speculators like Soros most certainly were gambling on the fall of the Hong Kong dollar, but the Hong Kong government did absolutely nothing to commit its massive reserves to support the exchange rate. There was therefore no profit to be made (unlike the scenario when Soros pocketted billions from the desperate actions of the British Conservative Chancellor of the Exchequer, Lamont). They were getting their fingers burned and they withdrew. Furthermore my informant suggests that it is likely that the Hong Kong regime which has never interferred in exchange rates in this way, probably advised the PRC not to interfere either, if they needed any advising.
The reason therefore why the Hong Kong dollar and the economy is steady when countries varying from Indonesia to Japan are buckling, is because of the fundamentals. After all where are the reports of massive US and IMF aid and lengthy negotiations as for these countries?
Hong Kong for a city state of 6 billion has massive reserves of the order of $30 billion (corrections gratefully received but I doubt if the order of magnitude is wrong). Hong Kong does not run a national debt, (which subsidises financiers). It runs a national surplus. Its revenues come very substantially from the public ownership of land.
I checked information on the flexibility of the market in leases. The new colonists in the 19th century had pressed for long leases, but the standard was 75 years, rather than 100. At the time of the joint agreement with the PRC (one country, two systems) the maximum length of leases was set at 50 years. Shorter leases have come in and licenses are possible that last for as short a period as 3 years. Further research I suspect would reveal a considerable variety of measures.
Furthermore all land is revalued every 2 years, and every time there is a change of usage, the government gathers additional income.
The admittedly unusual combination of social engineering with a vibrant capitalist commodity economy was intensified when the post war Labour government sent out Patrick Abercrombie in 1947 to a city that was then around 1 1/4 million people. His town planning policy was highly interventionist and among other things made provision for the development of satellite towns. No doubt this degree of intervention was not completely alien in a culture with a mandarin class and millenia of state power, and the influx of 1/2 million more following the Chinese revolution in 1949 would have made government planning and obvious necessity.
Thus even this year the new governor has announced the building of 87 thousand dwellings a year. This is a massive countercyclical intervention in the economy, when you compare the fact that the rate of new houses in England with ten times the population is of the order of 150 thousand a year only.
The fundamental point I have been making is robust and strategically very important. Of course there is no one cause of a particular course of events
and I am not ignoring the circumstantial reasons that have contributed to Hong Kong as an economic centre, nor am I saying it will not be overtaken by Shanghai in the 21st century. BUT this is a highly resilient city state, which
a) does not subsidise financiers through a massive national debt
b) does not support a landowning class.
c) is interventionist with land and social planning while not being interventionist in other capitalist markets.
This means that on a global level there are excellent possibilities of assisting campaigns to bring land and urban planning under more responsible social control, and likewise with finance.
These campaigns do not have to be led by communists. Nor do communists need to talk about the nationalisation of land. Already in Britain because of national planning restrictions in practice the bourgeois right to the unfettered private ownership of land has been restricted.
OK it is a fine convention to subject unfamiliar ideas to critical and sceptical scrutiny, and no doubt more of this could be stimulating rather than gently stifling.
The point, remember, is to change "it".
Does no one think it worth drawing a few constructive connections out of this??
Chris Burford
London