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Comment by Terr_ | Hacker News Reader

> sovereign wealth fund

That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar.

While various US think tanks ranked it well on their checklists of "economic freedom", they tended to gloss over the rest of the recipe that made it work. Not just the huge sovereign wealth fund, but also how half the housing is government-run or subsidized and you don't really own land, you just rent it for a very long term from the government.

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> you don't really own land, you just rent it for a very long term from the government.

This is probably economically a good idea, absent something like georgist land taxes. It eliminates some or all of the incentive to speculate in land, which is of course the whole problem El Salvador ran into with bitcoin as currency.

It hasn't entirely stopped rents in HK being untenably high, for many people. It has rent controls, but the system permits some very untenable outcomes which if left unchecked would re-create Kowloon Walled City.

So whilst politically I agree, practically I am unsure there is no land speculation: A waterfront view remains valuable in and of itself, no matter what.

Land in HK is weird. The lease thing is true but there are massive national parks that have nothing built at all.

The buildings that do exist are ~50 stories even though that's not optimal because of the typhoon situation. So constructive cost is high because government does not release enough land for development.

The rents are high because someone wants it that way. It's not a land scarcity problem IMO.

Also the government and the upcoming merge with China is strange in itself.

Kowloon Walled City ended because it was attacked by the state, rather than through market forces.

Many of those people are now likely in worse shape effectively renting a cage sized bed, but now paying the governments cut on top of whatever black market shenanigans goes on in both the slum housing and kowloon.

Kowloon Walled City was neither a dystopia nor a utopia. It works and was able to maintain itself, but it could have been done better if it was actually supported by the government.

That's "just" a bug-feature of common law systems

>The Kowloon Walled City was exempt and remained under the control of Qing China.

https://www.thecollector.com/kowloon-walled-city-lawlessness...

https://en.wikipedia.org/wiki/999-year_lease https://en.wikipedia.org/wiki/999-year_leases_in_Hong_Kong#V...

There is no problem with property values or rent values being high because they are the result of demand for living in a high quality area. There isn't a problem either with these prices varying over time as the attractiveness of the area changes.

The problems are wholly on the supply side, where either

- there are bad laws that lead to any of the following, or - developers legally or illegally cooperate to suppress supply

- landlords cooperate to push up rents or reduce quality.

- investors use land or housing units as speculative assets

- normal people want to use their primary residence as a way to build wealth, so politically support measure that artificially inflate their property values. Individually, this is not a problem, but when everyone does it, the system breaks.

The goal is to design a system where all of the above doesn't happen. A very big task.

P.S. I don't know anything about HK.

Forgive my ignorance but with just so many people and so much money and so little area, isn't high rents inevitable?

I contrast that to places like the USA and Canada that have huge amounts of area but policies that encourage inefficient land usage.

Right, obviously HK is a bit of a special case. Land in Manhattan would, I'm 100% certain, remain incredibly expensive.

The cool thing about leases is that you can change the cost of the lease periodically, which ensures that the value of the land does not accrue purely to the person occupying it.

> obviously HK is a bit of a special case

Reminds me of the old macro economist joke: There are 4 types of economies, developed economy, developing economy, Japan, and Argentina. Maybe HK should be added to that joke...

Or in Singapore

Singapore relies on the fact like 20 or 30% of their tax paying population is ineligible for public housing due to not being a PR nor citizen.

Economically, communism is a great idea. In practice, you get "collectivization" in the Soviet Union that basically starves millions to death

Don't millions starve too in capitalism?

No. No liberal capitalist economy has ever had a famine. By contrast, most communist economies have created major famines, and history's largest famines have all been created by communist economies, outdoing even colonialism in their death tolls.

These are well-known historical facts.

To save some time, can you define the True Scotsman here? Would the US in the 1920s count as a liberal capitalistic country for example? England in the 1860s?

Yes, and yes, which is one reason that, as it turns out, neither the US in the 01920s nor England in the 01860s experienced the famines that affected some other parts of the world at the same time. (In the 01920s Russia was experiencing its first famine that could reasonably be attributed to communism, and in the 01860s Sweden and Finland were experiencing their last famines before their transitions to capitalism.) But not, for example, Ireland in the 01840s and 01850s; that was neither, being colonialist and agricultural.

Nobody starved to death in "famines" like the so-called Lancashire Cotton Famine. By contrast, in the Finnish famine starting the next year, almost 10% of the population of Finland died. As it turns out, that was the last famine in Finland because it became capitalist over the following decades.

> In the 1920s Russia was experiencing its first famine that could reasonably be attributed to communism

There were no famines in the USSR from 1947–1991, but there was a variety of considerations such as monarchy, civil war, 2 world wars, and anti-communist sanctions from the 1890-1947 period, so if anything, it appears that the evidence would imply communism ended the famines, not caused them.

Certainly communism did eventually stop causing famines in the Soviet Union, but the Holodomor personally overseen by Stalin was worse than any Tsarist famine. And we have many other examples of communism causing famine: Mao's Great Leap Forward caused history's worst famine, for example (history's only famine worse than Stalin's Holodomor), but also, for example, the Ethiopian famine many of us remember from the 80s was caused by the Derg (who were technically socialist rather than communist), and one aspect of Pol Pot's democide in Cambodia was a famine, as well.

https://www.hawaii.edu/powerkills/COM.ART.HTM has more details, and https://en.wikipedia.org/wiki/Category:20th-century_famines lists some other examples, along with the odd non-communist famine. But none in liberal capitalist economies.

> But not, for example, Ireland in the 01840s and 01850s; that was neither, being colonialist and agricultural.

England was a capitalistic economy in the 1850s, no?

Yes, and England was at that time and for almost another century causing famines in its colonies abroad by preventing them from becoming either capitalist or liberal. Ireland didn't even get the worst of it; India suffered much worse under the English yoke.

Agreed. So it sounds like capitalistic economies can cause famines?

Certainly, if we're talking about their effects on people who aren't privileged to participate in the capitalist economy itself. Being colonized is much the same experience regardless of what economic system your colonists' families live under overseas. And I'd expect illiberal capitalist economies to cause famines, too; liberalism is more important than capitalism for preventing famines.

> That reminds me of Hong Kong, where I used to live and which maintains a large sovereign wealth fund to ensure its currency is pegged to the US dollar.

That doesn't sound like a soverign wealth fund. Foreign currency reserves are not the same thing as a soverign weath fund.

I'm not sure what you're reacting to here, I never said it was just US currency reserves. (Those are a component, sure, but that's hardly abnormal.)

> The Exchange Fund of Hong Kong is the primary investment arm and de facto sovereign wealth fund of the Hong Kong Monetary Authority.

https://en.wikipedia.org/wiki/Exchange_Fund_(Hong_Kong)

It's also 10th-largest on:

https://en.wikipedia.org/wiki/Sovereign_wealth_fund#Largest_...

HK has a currency pegged to the USD via a currency board, that is (similar to a stable coin) backed one-to-one with USD denominated short-dated treasuries. That is within the HK exchange fund operated by the HK Monetary Authority.

The exchange fund also (and somewhat controversially) runs additional portfolios (with foreign shares and bonds, and private equity, real estate etc.) in the manner of a sovereign wealth fund.

This is such a huge thing. One of my relatives worked in the housing authority of the HK government - he said that at any given time at least 50% of the housing was publicly owned and rented directly to tenants for like 2k HKD (~300 USD)/mo.

That's why anyone can afford to live there. Actual property leases are incredibly expensive - in the 10s of millions of HKD.

Hong Kong functions as a free-trade market by socializing large parts of its basic economy.

Like in the UK...

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