As of 1997 …
In today’s world big government seems pervasive. We may well ask whether there exist any contemporary examples of societies that rely primarily on voluntary exchange through the market and in which government is limited.
Perhaps the best example is Hong Kong. It is less than 400 square miles in size with a population of roughly 4.5 million people. The density of population is almost unbelievable — 14 times as many people per square mile as Japan, 185 times as many as in the United States. Yet they enjoy one of the highest standards of living in all of Asia — second only to Japan and perhaps Singapore.
Hong Kong has no tariffs or other restraints on international trade. It has no government direction of economic activity, no minimum wage laws, no fixing of prices. The residents are free to buy from whom they want, sell to whom they want, to invest however they want, to hire whom they want, to work for whom they want.
The role of government is limited. It enforces law and order, provides a means for formulating the rules of conduct, adjudicates disputes, facilitates transportation and communication, and supervises the issuance of currency.
Government spending remains the lowest in the world as a fraction of the income of the people. As a result, low taxes preserve incentives. Businessmen reap the benefits of their success but also bear the costs of their mistakes.
– Free to Choose by Milton Friedman