In today's post I want to share with you the five lessons we could learn from China that would lead America back to being the envy of the world and a powerhouse economy. And guess what? It doesn't include any bailouts, cheap imports, or a falling dollar.
But first, a brief history of China, specifically Hong Kong, for those who aren't familiar.
In 1898 the British government signed an agreement with China to lease Hong Kong for 99 years. That lease expired in 1997, some 13 years ago. At the time many Hong Kong residents, especially the wealthy Chinese, were concerned that it would immediately fall into a communist type regime which frowned on individual success and capital.
When I first visited Hong Kong back in the late 70s, it was a vibrant and bustling city. However, I was always perplexed as to why a country that is surrounded by a much larger communist country could survive and thrive.
Back then you only had to look at the Chinese merchants to see how industrious they were and how much they loved business and gambling.
Again I visited Hong Kong in the 90s to see much the same picture. The only cloud on the horizon was what would the future be like once Great Britain handed over Hong Kong to mainland China.
Well, here we are 13 years later and Hong Kong is booming - and I do mean booming. Contrary to popular belief back in 1997, Hong Kong did not implode, it exploded with new business.
How was all that possible?
The answer is much simpler than anyone can imagine. As a nation, the Chinese people are very pragmatic and decided to create one China with two systems. The system in Hong Kong is very different from the system in mainland China, which I will discuss in future blog postings. Most of all, I believe that China's one country, two system policy has everything to do with the Chinese mentality.
I was pleased to see that during my latest visit, Hong Kong was the same in many ways, but at a much more sophisticated level. The venerable "Peninsula Hotel" with its 18 green Rolls Royce's remains one of the last beacons of British influence and still serves it's legendary high tea at 3p.m.. This is a recommended stop for most visitors and having high tea reminded me of my British roots.
Business, of course, dominates Hong Kong and the business of Hong Kong is money and tourism for the most part. Everything must be imported into Hong Kong for it to survive which is why it was so important for the British to control the China trade in one of the most beautiful natural harbors in the world.
The Hong Kong of today bears little resemblance to the Hong Kong of the 70s when I first got my taste of China. If you ever get the opportunity to visit this part of the world, just do it. You will witness some of the most amazing architecture I have seen anywhere. In fact, many of the outstanding buildings were designed by American firms.
Now I promised you at the beginning of this article to list the five lessons we can learn to make America strong again. Well, here they are and it's all about taxes:
* No sales tax
* No capital gains tax
* No VAT
* Maximum salary tax of 20%
* Maximum corporate profit tax 16%
>>>>> PLUS NO ESTATE TAXES!!
The US economy is in recession and here's why:
* Sales tax
* Capital gains tax
* Potential VAT coming
* Maximum salary tax of 39%
* Corporate maximum of 39%
* Death Taxes
>>>>> PLUS OTHER TAXES
Now I'm not a politician or an economist, but I think you'll agree that you don't have to be a rocket scientist to figure what makes countries grow, prosper, and become strong.
America didn't grow strong and produce millions of jobs and be the envy of the world by having the second highest taxes in the world. America grew because it gave everyone a fair chance if they worked hard to do well.
I know this from personal experience as I left my native country, Great Britain, like many millions of other immigrants to seek my fortune in America.
Whether you agree or disagree with the Hong Kong model for America, please vote in our survey. If you have another suggestion, we would also like to hear that as well.
As always you are free to leave a comment on this article here on the Trader's Blog.
I will be making more comments and my views on mainland China in the next few weeks. I think you'll find my views contrary to popular thinking.
So stay tuned!
All the best,
President of INO.com
Co-founder of MarketClub