Tuesday, July 20, 2010

Hong Kong for shared prosperity

The minimum wage law that Hong Kong adopted on July 17 won’t give anyone a pay increase until next year, but it’s already a clear defeat for what Milton Friedman once described as the world’s greatest experiment in laissez-faire capitalism.

Lee Cheuk-Yan, head of the Hong Kong Federation of Trade Unions (HKFTU) and a member of the city-state’s legislative council, conceded that the law has short-comings, but said: “This means goodbye to unfettered capitalism.”

Under Hong Kong’s status as a special region of the People’s Republic of China, its non-elected chief executive, Donald Tsang, has much discretion on how the new law is implemented. A commission, appointed by Tsang, will come up with figure setting the wage floor, which a HKFTU campaign has demanded to be HK$33 (US$4) an hour. The minimum to be approved is reportedly closer to US$3 an hour. No ceiling on hours is involved.

For these and other initiatives, the Wall Street Journal accused Mr. Tsang of “misguided populism.” In truth, his initiatives could be small steps toward shared prosperity.

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