John Tamny – October 1, 2018
While airports frequently have “Duty-Free” stores within them, Hong Kong is a Duty Free city-state. It levies no taxes on incoming foreign goods. The only taxed products (regardless of country origin) are tobacco, gasoline, alcohol and methyl alcohol.
That Hong Kong is open to the world’s plenty very much explains why it’s so prosperous. The sole purpose of work is to exchange it for other goods and services, which means Hong Kong’s citizens get the most in return for their work.
Even better, the eagerness of Hongkongers to divide up production with the rest of the world means that they’re most likely to be doing the work that most amplifies their talents. The latter is a reminder of just how incorrect President Trump’s faux trade guru (Peter Navarro) is about openness to global production coinciding with job loss and impoverishment. If it were true, Hong Kong would be the living definition of poor and unemployed. That it personifies rich is a reminder that free trade doesn’t force us into breadlines as much as it makes it much more likely that we’ll get to do the work most commensurate with our talents.
To be clear, the fact that Hong Kong is a Duty Free marketplace is a major driver of its immense prosperity. An economy is just a collection of individuals, and individuals are better off when they have the whole world competing to meet their needs. After that, they’re much, much better off when they’re doing that which elevates their skills the most. Division of labor is what enables the latter. As such, Hong Kong’s authorities are in a very real sense the ultimate dealmakers precisely because they’ve made no “trade deals.” Crucial here is that they don’t concern themselves with high tariffs in other countries, or the false notion of a “level playing field.” What matters is that Hongkongers are free to purchase whatever they want tax free.