Deficit financing proper is rather the process whereby a Government spends more money that it withdraws from the economy by taxation, borrowing, running down reserves, etc.; thereby causing in most circumstances, and very acutely in ours, monetary inflation and severe pressure on the balance of payments.

I would suggest to my honourable Friend that the foreign investor is at least as discouraged by high national debt for that, as all example shows, is the surest precursor of high taxation.

I should like to begin with a philosophical comment. I do not think that when one is speaking of hardships or benefits one can reasonably speak in terms of classes or social groups but only in terms of individuals.

I am confident, however old-fashioned this may sound, that funds left in the hands of the public will come into the Exchequer with interest at the time in the future when we need them.

I still believe that, in the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralized decisions of a Government; and certainly the harm is likely to be counteracted faster. As I said earlier in this debate, our economic medicine may be painful but it is fast and powerful because it can act freely.

What gives me concern in so much of the comment is the implication that the people of Hong Kong have to be given a reward, like children, for being good last year, and bribed, like children, into being good next year. I myself repudiate this paternalistic, indeed colonialist, attitude as a gross insult to our people.

The fact that previous generations have handed down to us a substantial public heritage by way of roads, port, etc. almost completely free of debt, seems to me to impose some limitation on the validity of the theory that by borrowing we should, or could, pass on the burden of development to the next generation.