Actually this is not on the land arrangements in HK but on its non-devaluation. It is clear that a, if not the, major reason HK did not devalue is that the PRC did not want them to. The two economies are deeply linked financially in many ways and an HK devaluation would have put tremendous pressure on the PRC to do so. But, listening closely to Uncle Larry Summers, the PRC had decided not to and ordered HK to hold the line. The real question then becomes how the PRC will pay off the real estate holders in HK who took a hit from the high interest rates needed to defend the HK $. Barkley Rosser On Wed, 29 Jul 1998 22:19:23 +0100 Chris Burford <cburford at gn.apc.org> wrote:
> At 01:34 PM 7/29/98 -0500, Barkley wrote:
>
>
> >Chris,
> > I would avoid making too much of the peculiar land
> >arrangements in Hong Kong. I certainly wouldn't attribute
> >any great countercyclical power to them.
> > One thing they do show is that the system of private
> >property is really a complex spectrum with a lot of
> >intermediate cases out there. Given the length of the land
> >leases involved and the very free market in them, Hong Kong
> >is very far in the direction of market capitalism in land,
> >despite the juridical state ownership of land. The PRC
> >also has leases, but is not as far as the leases have
> >tended not to have the same length.
> > BTW, I note that one finds Hong Kong arrangements in
> >sections of London. For example, most of the hotels on
> >Gower Street are technically owned by the Crown. But there
> >are long-term leases on them that are bought and sold
> >regularly. Very capitalistic.
> > The values of those leases in Hong Kong can go up and
> >down just as the value of land itself can. There is no
> >guarantee against bubbles or any of that.
> >Barkley Rosser
>
> Well I accept that more information is needed to sustain the case. But I
> still feel it is remarkable that Hong Kong has not devalued, when there was
> speculation that even the PRC might.
>
> Concerning the public ownership of land I think the case is made that this
> is compatible with market capitalism, and this opens a range of
> possibilities for greens and socialists.
>
> But Barkley has come back to comment on the specific issue of whether the
> public ownership of land and the auctioning of leases may help to cushion
> the capitalist business cycle. I was not clear whether Michael Hoover was
> saying that almost all land leases in Hong Kong are 100 years old. I
> certainly assumed some were shorter.
>
> I take Barkley's point that there are a whole range of possible
> permutations. The system he has met in central London sounds like
> leasehold, which is carefully not freehold, and may have clauses tying the
> lucky leaseholders to various conditions about service charges and other
> restrictions. Come to think of it, it sounds as if the *freehold* of much
> of central London could be nationalised without interrupting the present
> situation.
>
> I am afraid though with the confidence of naivety, I continue to assume
> that if reasonably short term leases on land can be sold by auction in Hong
> Kong, the price could drop very promptly and allow businesses to start up
> again as soon as a recession dulls competition for land.
>
> Since rent is top-sliced from surplus value before profits are totalled,
> this must speedily allow the rate of profit to rise, against its tendency
> to fall.
>
> a) what is wrong with that thought experiment?
>
> b) what concrete evidence is there that that does not happen in Hong Kong?
>
> Chris Burford
>
> London.
>
-- Rosser Jr, John Barkley rosserjb at jmu.edu