Extract from the Far Eastern Economic
Review dated December 22nd, 1948.
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There is nothing Hong Kong can do about a possible recession of trade in the countries adjoining the Colony. can, however, take thought of the morrow in its domestic policy. There has not been unbridled inflation in this Colony, but there has been a plethora of money on the market without a proportionate volume of goods and services, and prices have tended to stay high.
Something, therefore, should be done to drain away by means of taxation some of this surplus purchasing power, but the budget surplus thus accruing should not be spent but locked away until the time when business activity is less as prices fall and budget deficits appear in the affing. On the other hand, some revision could be made in the Government's spending programme. Extensive expenditure was inevitable to get the Colony back on its feel but the spending. habit should be carefully examined with a view to turning spending into saving. Large capital expenditure on extensive social services pump purchasing power into the community and keep prices of available goods and labour high. These in turn mean high costs of production which bring high selling prices, and high selling prices just will not do the moment our neighbours have not the money to spend on our goods and services. New buildings are attractive, new avenues of Government activity are no doubt desirable in this community.
Most of us have our pet schemes on which the Government should dispense its bounties next. Education, social services, port facilities, and new roads and buildings, reclamation and housing schemes, all vie with one another to get their hands into the budjet pot. The question at the present time, however, is not "which can one afford to include in a balanced budget", but rather, "which cannot be left over until the inflated economy of this Colony has been put on a more 'e'ven keel.
It is no longer a question of getting by way of taxation more than we spend or spending a great deal less than is collected. A large budget surplus is as necessary in Hong Kong today as it is in the United Kingdom.
A little less thinking about planning and a little mor e "planned thinking" is required. Clearly the only new Government activities which can be labelled "essential" are those which, if not undertaken, will cause the Colony to slip from its position as the major entrepot in the Far East - e.g. a new Air Port. Anything less than "essential" however desirable, should be postponed until we have shaken the last vestiges of inflation from our shoulders. Any other policy will in a few years find the Colony top-heavy with a load of capital assets depreciating in value at a rapid pace, while the Colony will perchance be using current income to meet that depreciation and interest on its debt. This Colony, no more than any other country in Asia, can have all it wants. It must decide its list of priorities on the assumption that sometime in the near future Asia will have to pay its own way. The shock of the transition
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