What kind of financial center does Hong Kong need?
Through “First Principles”, Space X was born and brought potentially revolutionary and subversive impacts to the world. By exploring the “deepest foundation” of Hong Kong’s international financial center, we may be able to know what kind of financial center we need.
Author: GUDORDI | 2023-06-06
What is the “deepest foundation” of Hong Kong International Financial Center? What kind of financial center do we need? (Shutterstock)
“First principle” is the first basis from which a thing is known.
─ Aristotle
In the last chapter, the author mentioned the concept often emphasized by FA Hayek, which is that many phenomena in the world can only be a “natural order” (Spontaneous order) that cannot be created by human planning. In an earlier article on November 13, 2022, “Things are planned by people, and things are accomplished by heaven”, the author also mentioned the view of another master of philosophy, Sir Karl Popper, that the development of worldly affairs often has different consequences. There are less accidental elements, and the essence of social phenomena is “the unintended consequences of intentional human actions caused by a series of conscious personal actions.”
Following the ideas of Hayek and Popper, perhaps all we can do about this kind of “unconscious overall social effect” is to adhere to the principles that help to generate the “total social effect”. In the last article, the author mentioned that the first of the three main principles in developing Hong Kong as an international financial center is to make full use of the power of the free market. The second principle is to rely on the concept of First Principle that Elon Musk often emphasizes.
Musk is the most prominent example of applying “first principles” thinking
Basically, “first principles” is a concept in philosophy and science that was first proposed by Aristotle. To put it simply, the concept is a bit like that of a child, starting with some basic questions. Don’t underestimate the importance of childish questions. For example, Isaac Newton asked: “Why do apples fall from the tree?” Plato asked: “Why is there a government in the world?” Coase asked: “Why do we see governments in the real world?” Is there such an organization as a company? “The above are some people who have made groundbreaking contributions in their fields. The existence of these examples shows that childlike curiosity can create a “paradigm shift” in how humans understand the world.
Moreover, the importance of the relevant concepts should not be limited to the intellectual world. Since ancient times, there have been many people who have emphasized this concept and achieved remarkable results in action. Berkshire County Vice Chairman Charlie Munger and military strategist John Boyd are examples. But the most prominent example is undoubtedly Musk, the founder of Tesla and Space X.
From many perspectives, Musk is an odd man. The ideas he proposed seemed to many people to be like fantasy, but what is amazing is that he was able to put them into practice uncannily, bringing potential benefits to many industries. Revolutionary and subversive impact. This raises the question of how Musk came up with a way to realize his whims. According to him, one of the important tips is to emphasize the “first principles” way of thinking.
Musk, the founder of Tesla and Space X, is a successful example of emphasizing and practicing “first principles.” (Asian News Agency)
Space X’s business breakthrough can be attributed to Musk’s “first principles” thinking
In a media interview, Musk said that his way of thinking that emphasizes “first principles” was learned from physicists. He mentioned that when physicists deal with extremely complex things, they often start from “first principles” and ask some basic questions first, and then proceed layer by layer. The important thing is that if the issue of “first principles” is handled well, it can often open up a completely different way out that can produce miraculous results.
According to Musk, the breakthrough achieved by Space X’s business is based on this “first principles” thinking. Basically, Musk’s “primary question” may be what humans need most to cope with the future. He believes that if human civilization can only exist on the earth, the risk is very high. Therefore, he believes that humans must be able to live on Mars, but to achieve this, the cost of taking a rocket to Mars cannot be too high. Therefore, Musk first studied the cost of launching a rocket, and the answer he got was a very high US$65 million. He then went to find out what the raw materials for making rockets were and what their total cost was. The answer he came up with was that the total cost of materials only accounts for about 2% of the total cost of launching a rocket. Therefore, the high cost of launching a rocket is not due to the cost of materials, but to other factors. Therefore, he focused on reducing those costs. In the end, he managed to control the cost of launching the rocket to only 10% of the usual rate. Therefore, even if the price charged by NASA is significantly lower than the current level, it is still profitable. This was the key breakthrough point in Space X’s business, and Musk attributed it to his “first principles” thinking.
Musk’s “top question” is what humanity needs most to cope with the future. (Shutterstock)
Can "first principles" thinking also be used to analyze Hong Kong's development as an international financial center?
What’s important is that if this “first principles” thinking can be used by Musk to develop his career, perhaps we can also use this concept to analyze Hong Kong’s international financial center career. Therefore, it is worth asking: What kind of financial center does Hong Kong need?
We can deal with this problem at different levels. On the one hand, we can first look at what opportunities are available in the current global financial system, and then examine Hong Kong’s own conditions to identify those areas in which Hong Kong has the highest chance of success. On the other hand, we can also look at the cases of successful financial centers in history to see which models are most suitable for reference for Hong Kong. However, if you think about it a little deeper, none of the above are necessarily concepts that strictly adhere to “first principles”. As Aristotle said, the so-called “first principles” are the “deepest foundation” of anything. “
Therefore, if we really strictly adhere to the “first principles” way of thinking, we seem to have to ask what is the “deepest foundation” of the financial center? However, the concept is far from simple and difficult to answer. Going further, if we can answer the above questions about the opportunities in Hong Kong’s financial industry well, that would be great. Do we need to be so demanding? Undoubtedly, if the relevant questions can be answered well, the value created can be immeasurable, but is it worth it? There is no doubt that Musk’s achievements are amazing and world-renowned, but he has also paid a lot of money and taken huge risks. Is it worth it? These are some issues worth pondering now, and we will discuss them next time.
“Hong Kong’s Legendary Future” Series 33
Contact the author: Gudordi@proton.me
