What's So Free About Hong Kong and Singapore Anyway?

For the 17th straight year, the Heritage Foundation has ranked Hong Kong at the top of its Index of Economic Freedom rankings, which partly measure competitiveness. For about the same period of time, a series of interlocking cartels has for years stopped an anti-monopoly law cold in the Legislative Council.

A joint project of the Heritage Foundation and The Wall Street Journal, the Index ranks countries on a 1-100 scale on the basis of 10 measures that evaluate openness, the rule of law and competitiveness. The 10 scores are averaged to produce the overall score.

Among the Index's 10 criteria, however, there seems to be no score to rank the existence of oligopolies or state ownership of major businesses. The conservative, Washington-based think tank ranked Singapore second in the world, despite the fact that if ownership of the means of production is a definition for socialism, Singapore would warm a commissar's heart. Some of its biggest industries, including airlines, armaments, media, transport and others, are majority-owned by the government and its economy is closely managed by the government.

"We are not unaware of these things," said Dr. Edwin J. Feulner, the president and CEO of the Heritage Foundation, in a telephone interview. The process of rating, he said, is relative. "How do you measure competitiveness? We don't measure competitiveness in terms of market share. Ease of entry, subventions to different elements, we have talked about the property situation in Hong Kong.

"The basic point is that there is no country in the world that is perfect."

Countries that score well demonstrate a commitment "to individual empowerment, non-discrimination and the promotion of competition," the Heritage Foundation and the Wall Street Journal said in a joint press release. "Their economies tend to perform better, and their populations tend to enjoy more prosperity, better health and more positive measures on a variety of quality-of-life indices."

Hong Kong, according to the press release, "led the world in four categories of economic freedom: business freedom (98.7), fiscal freedom (93.3), investment freedom (90) and property rights (90). Singapore gained ground on the strength of its world-best score in labor freedom (98) and moved closer to the top spot with a 1.1-point improvement this year.

Asked about the fact that the Singapore government probably owns a larger share of its economy, proportionately, than any other country in Asia, Feulner said the Heritage Foundation urges Singapore to cut back on government ownership.

In terms of competitive freedom, don't look for any big-box retailers to open their doors in Hong Kong. Carrefour tried and was driven out of business by cartels that controlled all of the produce and other merchandise that Carrefour attempted to buy locally, making sure the French retailer would be unable to deliver price competition. Eventually Carrefour left the territory. Ironically, WalMarts have been sprouting all over China.

The four freest economies are in the Asia-Pacific region, the report said. Australia finished third despite a 0.1 drop in its overall score. New Zealand finished fourth, and had the world's best scores in two of the 10 Index categories: business freedom (99.9 out of 100) and freedom from corruption (94). North Korea finished dead last with an overall score of 1, was more than 22 points lower than any other country and nearly 37 points below the next lowest score in the region. Burma, Timor-Leste, Turkmenistan, Kiribati, Uzbekistan, the Solomon Islands and the Maldives were all rated as "repressed."