Which British individual has done the most good for the world during the last half century or more since the Second World War? I nominate Sir John Cowperthwaite, Financial Secretary of Hong Kong from 1961 to 1971, who died last Saturday.
By applying laissez faire ideology to Hong Kong with greater inflexibility than anyone else was at that time even attempting, anywhere, he became, in Patrick Crozier’s words, the father of Hong Kong’s economic boom.
And that, if you think about it, makes Cowperthwaite the grandfather of the Chinese economic boom.
Without the shining example of Hong Kong, and the economically benign influence that Hong Kong has for a long time now had on nearby places still governed by Beijing, who knows what economic – and political – state China would be in now?
Cowperthwaite was criticised during his time in office for not taxing the people of Hong Kong more, and for ignoring, in particular, education. But has there ever been a more stupendous exercise in business education and everything-else-you-can-think-of education than Hong Kong? Hong Kong has been a University of How To Do It for millions upon millions of Chinese, Chinese who are now struggling to turn China itself from a suicidal and murderous world threat into a creative contributor to the world. The productive and trading templates now being followed in China were mostly devised in Hong Kong, and Hong Kong still provides a huge connection between China and the rest of the world.
So, there is at least a decent chance that China will emerge onto the world stage not as a belligerent superpower in the Soviet mold, but as a creative superpower more like nineteenth century Britain or nineteenth century USA.
Of course China still faces severe problems, as has been well explained here. It could all, and quite soon, go horribly wrong. China’s creatively earned wealth and strength might yet – following some kind of economic melt-down – be cashed in to pay for the means to make only mischief on a huge scale.
But China’s economic strength is not a total illusion, any more (well, maybe a bit more) than the USA’s economic strength was wholly illusory in the late 1920s. (The worry about that comparison being that the USA proved that it could be the engine of world economic growth only after a huge depression and a huge world war.) And if, in a hundred years time, historians are able to look back on a century of (mostly) Chinese creativity and progress rather than of Chinese chaos and ghastliness, Sir John Cowperthwaite will arguably deserve more credit for that happy outcome than any other single individual.
The nightmare always was that the Chinese people would feel that they had to fight and to destroy to get the world’s respect. Cowperthwaite’s Hong Kong showed the Chinese people that they were capable of unleashing a better and more creative way to be respected, a way that the whole world is already benefiting from.
Patrick Crozier, to whom thanks for the link, picks out this particularly choice quote from the Telegraph obituary of the great man:
As for the paucity of economic statistics for the colony, Cowperthwaite explained that he resisted requests to provide any, lest they be used as ammunition by those who wanted more government intervention.
The state is not your friend. The less it knows, the better.
A good nomination. James Bartholomew, of course, writes extensively on Cowperthwaite in his book on the Welfare State. But then you knew that already.’
The model for imitation which JC created in Hong Kong calls to mind a German factory worker I saw interviewed on (where else?) Channel Four news. The company he worked for faced a takeover from an American concern. The worker was comparatively articulate on what that would mean for his pay and conditions and all the stuff that, under German law, he took for granted.
Not once did it occur to him that the strength of the American concern, the strength that enabled it to prowl for acquisitions, was caused by the opposite of that which caused his own company’s weakness – and left if vulnerable to takeover.
Apropos non-provision of government statistics:
Sir Humphrey: “Without these figures, the government statistics will be a nonsense.”
Hacker: “The government statistics are already a nonsense.”
Bernard: “Perhaps Sir Humphrey wishes to ensure that they will be a complete nonsense?”
(Yes Minister)
There’s also a good account of Cowperthwaite in the chapter on Hong Kong in P.J. O’Rourke’s “Eat the Rich”.
I lived there during most of that decade and it should be noted that there were two things that only the very most robust of economies could have reasonably withstood:
the huge influx of refugees from China which more than doubled the population and needed a vast building program at government expense to house;
the cultural revolution in China which created a lot of adverse political activity from 1965 leading up to the riots of 1967 generated from over the border. (The Hang Seng index dropped from 1500 to 150).
It needed a big military presence of army, navy and airforce to keep the refugee problem from overwhelming the colony.
(Funny how those ignorant people wanted to flock to live in such colonial ‘oppression’)
For a detailed study of the workings of this great economy commenters on this blog might want to read “The Hong Kong Advantage” by Enright, Scott and Dodwell, published in 1997. The groundwork laid in the decade of the sixties led to an explosion in the next two decades when the policies were continued.
I should make clear that the explosion I referred to meant a sudden vast increase in wealth.
One could rejig Churchill and say of this fine man: never was so much created, by those who enjoyed a government that did so little.
He was a fine man indeed. And obviously not a busybody, like Tony and Gordy. He trusted the human instinct to strive to rise to better circumstances and let it go at that. A true hero.
“…… did so little”
Not quite true, for while it did not interfere in the commerce and industry of the colony it did perform extremely well in the areas where there was no other solution. The infrastructure – roads, tunnels, railways including the underground MTR, water storage like in Lantao and Tolo harbour and of course the new airport at Chep Lap Kok; vast projects all handled without deficits. In fact about $40 billion surplus was handed over to the Chinese when they took over in 1997.
A savagely inspected (by the ICAC) and extremely effective police force and justice system was another massive contribution.
That airport was a similar project to the proposed Maplin Sands which the Uk balked at as just too big to tackle.
While I was very aware of the capitalist climate in HK, and relished the incongruity, I had only a dim idea of Sir John’s contribution, based on an article read years ago.
Thank you for the update, and the reminder that persons of courage and principle can still make a real difference in the world.
I wander around on the internet like an old man on a walk through an intriguing countryside, seeing the sights, looking for that nice little cafe to try for lunch, that out of the way bookstore on a side street of some drowsy small town, that impressionistic meadow with plenty of flowers and a winding creek running down the middle.
A few years ago, I found a special tree to sit under and think about things like this—the life and works of a special man, the power of an idea—called Samizdata.
Thanks for all the shady afternoons.
And HK is a remarkable place in many varied and varying ways.
I have a strong feeling that the city is in decline for now, however; Beijing would rather a home-grown economic champion. Watch as more and more HK-based companies move to Shanghai.
Shanghai under the CCP won’t come close to HK’s freewheeling ways – to its enormous detriment, I might add.
As a regular user of HK Airport the UK could do worse than take that design and plonk a facsimile in the Thames Estury (possibly 3 terminals worth to cope with the traffic). One long, flat smooth walk all the way from Customs to the high speed railway linking it to a city centre check-in. Once completed and migrated, Heathrow can become housing with the nature reserves around to provide breathing space.
As to Shanghai, it is freewheeling enough from what I saw, being far enough away from the ‘dead hand’ of Beijing bureaucracy.
Apologies.
Cowperthwaite was born in 1915, not 1916 as originally stated in the titled of this posting. Which I have now corrected.
Thoughts:
– veryretired – how elegantly put.
James Waterton – or may I call you Suffering? – this is distressing indeed.
Johnathan Pierce – well said.
The only thing is, I wonder whether there are any other populations outside China that could have seized so well the opportunities presented by the Cowperthwaite plilosophy
Imagine how much more prosperous Britain would be today if Labour had used Cowperthwaite at the Exchequer instead of Sir Stafford Cripps.
Even with my negative view of human beings I do not think that there is any population on Earth that would not have prospered given decades of peace, strictly limited government and respect for property rights.
There was crime in Hong Kong (as there is all places), but most people could get buy without paying big taxes to government or being tied up in regulations – and (for all the talk of organized crime) most people did not find themselves paying large unofficial taxes (bribes and protection money) or obeying unofficial regulations (“do this or we burn the place down”) that mess up so much of the world.
If people are not subject to big government, or to crime on a big scale (i.e. crime that effects most people) then a population of whatever ethnic group will prosper, at least within the limits of what nature allows (I am not claiming that respect for property rights will save you if you fall into a Black Hole or anything like that).
As for Sir John Cowperthwaite I first came upon the name back in the 1970’s when the Sunday Express (then a serious newspaper) had articles that talked about his work. Although he had retired his successors had not really messed up the basics (although they did some bad things).
Then I remember reading about him in Milton Friedman’s “Free to Choose” (1980).
He was a great man, he did the things that people like me only talk about doing. He was not a perfect libertarian – but I would rather have nonperfection in reality to perfection that stays simply theory.
Of course Hong Kong is under China now so whilst taxes and regualtions are still low, policy could shift without warning.
Oddly enough in Taiwan (once, in the early years of K.M.T. rule back in the 1940’s but extending to the 1960’s, a state dominated place) there seems to be a culture of low taxes and respect for property rights. There is corruption (there was ever corruption in Hong Kong), but there does seem to be a culture of fairly limited government (for example taxes are less than a quarter of G.D.P. and such things as the arbitrary shutting down of newspapers would be considered unacceptable).
Perhaps people in Taiwan had a long look at the success of Hong Kong and decided to follow the same path.
Perhaps even powerful people in the People’s Republic of China viewed the success of Hong Kong and decided to copy some of it. Not the rule of law of course (unlike Taiwan were there is the rule of law), but allowing the existance of private industry and making sure taxes and regulations (at least official ones) were very low.
An interesting legacy for Sir John Cowperthwaite to have left us.
My suggestion that the Chinese made the most of the laissez faire philisophy was based on cultural not ethnic differences. Those people have a work ethic and a ‘can do’ attitude that outstrips any I have seen from other groups. Others could have done well but not so magnificently well.
As to corruption there was no comparison with the levels in Taiwan and Hong Kong. It was far higher in Taiwan. The ICAC (Independent Commission against Corruption) investigated all government and indeed non-government organisations concerned with public utilities including the police. None of the nonsense that you can only use the police to check on the police which they always get away with in UK. And you should have seen what came out of the woodwork.
In Taiwan I think my old Hong Kong Chinese friend’s quote about a certain government department there best illustrates the position. “Can’t do business with X”. Why not? “Too many Buddhas” What do you mean – too many Buddhas? “Well you know that Temple of a Thousand Buddhas in the New Territories, well you have to put a joss stick in front of every one of them to get good luck”.
I agree that corruption was far higher in Taiwan than in Hong Kong – the level of general statism was also higher.
However, the Hong Kong of Sir John Cowperthwaite (or even those less property upholding British officials who came after him) is no more.
Under Chinese rule, even with the special safeguards put in place, such bad things may rise in the future. And such bad things may decline in Taiwan (I suspect they will).
On culture: I agree that culture matters, however (like Brian) I think that culture is not fixed – it is influenced by the conditions people find themselves in over time.
Where I differ with Brian is that he thinks that culture changes with changed conditions a lot quicker than I think it does.
For example: end the Welfare State and restore the old culture of thrift and mutual aid.
Brian thinks that would happen quickly and I do not.
I believe that improving a culture is hard and takes time (as well as good conditions). But then I am follower of Edmund Burke.
I agree on pretty well all points. But I can’t see any comments by a ‘Brian’. what is that about?
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That reminds me of Churchill’s coment on Cripps. It was during the war and Churchill’s plane had to set down in the north african desert for emergency repairs. Winston got out looked around and said. “Here we are marooned in all these miles of sand, not a blade of grass, not a drop of water or a flower, how Cripps would love it.”
Brian is the first name of the man who wrote the posting (the one we are commenting on). I should have used his family name.
On Cripps – yes Mr Austerity (spelling).
Still he had his good points. He did not approve of the terror bombing of German civilians.
He may have resented people having a good time (and rationalized this with a twisted view of economics), but he did not agree with burning them alive.
His speech to the Bomber Command during the war (the “God as co-pilot” speech) telling them to avoid killing the innocent did not go down well.
And rightly so – as if the politicians say “destroy the factories in city X” the only of having much hope of doing that (with the technology of the time) is to destroy city X.
Although I note that sometimes a city could be spared (for example Operation Bowler [spelling] to destroy the docks at Venice without destoying Venice) and there was a theory put about by many people that killing vast numbers of enemy civilians would somehow “break the enemy will to fight”.
Whether Harris himself ever really supported this (demented) theory I do not know.
A point on statistics as “ammunition” for supporters of intervention.
That was not really Sir John Cowperthwaite’s point – he said “what would we want them for?”
That is the point – statistics are the life blood of government “planning”. Whether it is Sir William Petty and his plans of Ireland in the 17th century (he was one of the great modern promoters of statistics, Royal Society and all that, and without them he knew his schemes could not be put into effect), or the utilitarians of the 19th century.
Some of the utilitarians indeed may have been free market folk (at least in manufacuring – James Mill and company wanted to take over all the land in India, and [in private] expressed the same desire regarding Britian) but they did tend to want lots of stats. Perphaps because Jermemy Bentham’s version of utilitilitarianism (many people had used the word “utility” before him of course) relied on making happiness calculations to decide moral questions.
J.B. may have wanted to get rid of some old “feudal” placemen, but he also wanted 13 great departments of State. And his followers were upset that he did not live to see the Birth, Marriages and Deaths Act of 1836 (he died four years before I believe) that, as well as giving them government marriages (which fitted in with their antichurch opinions) also gave them some of the stats they needed.
Edwin Chadwick and his great reports into policing, sanitation, and all the rest of it.
The “reforms” of local government, and the interventions into education, the Civil Service “reforms”, everything depended on stats – not just as ammunition, but as heart’s blood.
It is untrue to say “no stats, no government” but it is true to say “no stats, no big government”.
And the mathematical approach to economics, established by James Mill’s friend David Ricardo, is fundementally in error – it gives government’s the illusion that they can know more (and, therefore, achieve more) than they really can.
As you know this was one of F. A. Hayek’s favourate targets. Although, sticking to economics, J.B. Say had refuted Recardo’s false method at the time. As did Richard Whately and Nassau Senior in Britain.
“But today maths rules economics and common sense is dead” – clearly not totally true, as the example of Sir John Cowperthwaite shows us.