The advantages and disadvantages of free markets are much the same for Hong Kong as they are for anywhere else. In my opinion and that of the vast majority of economists, the advantages outweigh the disadvantages; but we should be honest about the fact that there are real disadvantages for...
The advantages and disadvantages of free markets are much the same for Hong Kong as they are for anywhere else. In my opinion and that of the vast majority of economists, the advantages outweigh the disadvantages; but we should be honest about the fact that there are real disadvantages for many people.
The chief advantage of free market globalization is increased economic efficiency. This benefit must not go unappreciated; it sounds like we're just saying some numbers go up on a graph. But improved economic efficiency means better lives for millions of people. It means more goods for less work, more wealth and less poverty. The expansion of free markets around the globe is the chief reason why global extreme poverty is now at the lowest level it has ever been.
The chief disadvantage of free market globalization is increased economic inequality. When we open ourselves to free markets, we make both winners and losers, and as a result some people become much wealthier while others remain the same or may even become poorer.
Another disadvantage, particularly applicable to Hong Kong, is volatility. Markets can shift suddenly and randomly, and particularly when a small country is linked by trade to larger countries, GDP can rise and fall dramatically as the tides of global finance change. Hong Kong only has a population of about 7 million, compared to its chief trading partners China and the US with 1.368 billion and 321 million respectively. An economic shock that may feel minor to China or the US could nonetheless have huge effects for Hong Kong.
These are indeed the results we've observed. Since they have liberalized their markets (to, by some measures, the freest markets in the world), Hong Kong has seen high economic growth, but also much higher inequality and volatility. Overall Hong Kong is better off, but some people have benefited much more than others, and many people may actually be worse off.