Hong Kong, Singapore and Dubai: Classical Liberal Paradises

Hong Kong, Singapore and Dubai are examples of libertarianism/ classical liberalism/ the virtues of laissez faire capitalism.

Big claim, any evidence backing this up? Is this remotely linked to reality? Well, let’s take some of the best arguments about this we can find easily at hand, and then assess their strength. Starting with Hong Kong, the first one I think that serves the purpose is this here from the Foundation for Economic Education. This article, as expected, extols the brilliance of a classical Liberal area of unrestricted trade which showcases the wonders of rule of law and liberalism:

Why? As Hong Kong’s last British governor, Christopher Patten, wrote in his memoir, East and West, the refugees from communism who flooded into Hong Kong arrived in China’s only free city; it was indeed (in the words of Chinese journalist Tsang Ki-fan) “the only Chinese society that, for a brief span of 100 years, lived through an ideal never realized at any time in the history of Chinese society—a time when no man had to live in fear of the midnight knock on the door.” Hong Kong had a competent government, pursuing market economics under the rule of law. It was a government that fully met the Confucian goal—“Make the local people happy and attract migrants from afar.”

The laissez-faire attitude of the Hong Kong government on economic matters was cemented by Sir John Cowperthwaite, the colony’s financial secretary from 1961 to 1971, whom Welsh called a “political economist in the tradition of Gladstone or John Stuart Mill” and the personification of “unreconstructed Manchester-school free traders.” Cowperthwaite had almost complete control of Hong Kong government finances and used it to implement his policy of “positive nonintervention.” Friedman gave Cowperthwaite a great deal of the credit for Hong Kong’s success, citing approvingly Cowperthwaite’s refusal to collect most economic statistics on the grounds that “[i]f I let them compute those statistics, they’ll want to use them for planning.” Jimmy Lai has a bronze bust of Cowperthwaite at his company’s entrance (as well as ones of Friedman and F. A. Hayek).

Cowperthwaite deserves the accolades he has received. During his decade as financial secretary, real wages rose by 50 percent and the portion of the population in acute poverty fell from 50 to 15 percent. What is remarkable is that Hong Kong accomplished this with no resource other than its people. The colony had no real agricultural land, no natural resources, and even the one resource it did have—people—lacked much education. Indeed, few at the time thought that the masses of refugees who reached Hong Kong during the 1950s would amount to anything other than a burden for the state.”

Whoah, whoah, whoah…hang on a second. “Hong Kong had a competent government, pursuing market economics under the rule of law” but “Cowperthwaite had almost complete control of Hong Kong government finances and used it to implement his policy of “positive nonintervention.”” Eh?

So which is it? Rule of law made this possible, or someone with” almost complete control of Hong Kong government finances” am I missing something here? Is this making any sense?

Why has Hong Kong been so free? Partly, Hong Kong has been fortunate to be ruled by men who understood their role as quite limited. Not quite the classical-liberal ideal, even under Cowperthwaite, but nonetheless significantly closer than any other twentieth-century society.”

So it was not ruled by law, but by men now? But they understood their role was limited, unlike in the west, were the executive can’t do anything without the approval of other branches of government, and the public, being democratic? Is this computing as gibberish to anyone yet? (side note, you will find most articles which praise Cowperthwaite will use the Heritage foundation rankings as well, without the slightest sense of embarrassment.)

Leaving this aside, let’s look at another article, again from the FEE which concentrates on Cowperthwaite directly, and lo and behold, it introduces with the heritage foundation statistics, followed by:

What makes it so free is music to the ears of everyone who loves liberty:  Relatively little corruption. An efficient and independent judiciary. Respect for the rule of law and property rights. An uncomplicated tax system with low rates on both individuals and business and an overall tax burden that’s a mere 14 percent of GDP (half the U.S. rate). No taxes on capital gains or interest income or even on earnings from outside of HK. No sales tax or VAT either. A very light regulatory touch. No government budget deficit and almost nonexistent public debt. Oh, and don’t forget its average tariff rate of near zero. That’s right—zero!”

That’s right. Rule of law created Hong Kong…but, o right, this is an article about how Cowperthwaite was behind it…

“So while the mother country lurched in a socialist direction at home under Clement Attlee, Cowperthwaite became an advocate of what he called “positive non-interventionism” in HK. Later as the colony’s Financial Secretary from 1961 to 1971, he personally administered it.”

So was Cowperthwaite “rule of law” or am I missing something here? Was this his nickname? Because I am noticing a pattern here, which goes roughly like this – Cowperthwaite had wide ranging powers to decide by decree and judgement, did so, and created conditions in which maximum freedom was provided to an industrious population, which proves that rule of law and limited government is the way forward. OK, got it…nope, I don’t follow.

Should I bother trying to make sense of explanations of how Dubai and Singapore are the result of rule of law and classical liberal republicanism? which likely, by utter coincidence, will also, I am sure, be the unexplained nicknames of Rashid bin Saeed Al Maktoum and Lee Kuan Yew.