And what about the United Kingdom? In 1960 the GDP per capita of the colony was about 28% of the European country, in 1996 it was 137% (today it might be higher). ¿How could a colony, ruled by an essentially undemocratic system of government, with no natural resources, no historical background and little land (1400 km 2), part of them uninhabitable overtake the birthplace of the industrial revolution and the former world superpower? For Milton Friedman the answer was to be found in the different economic policies of both countries: “… socialism in Britain, free enterprise and free markets in Hong Kong”.
One key factor in all this story is that the share of the public sector in GDP was maintained around 7%-15% during the decades following WWII in comparison with the 40%-50% of most of the developed Western democracies. It is a figure not found anywhere else, so taxes are low and resources are not diverted to nonproductive government uses. Monetary and budgetary discipline have avoided the economic distortions that their mismanagement always cause.
The 20th century has been a century of social experiments, whether we are talking about democracy, the welfare state, communism, fascism or other dictatorships or political systems (more or less original) of different colors. In essence, the differences are summarized in more or less state, more or less government planning of more or less spheres of life. That is, more or less freedom. Many of those social experiments, such as the communist utopia and its derivatives, have failed miserably and have brought ruin and poverty to those countries that implemented it without exception, whether in Russia, Cuba, Ethiopia, Vietnam, China or Poland. Prosperity has taken root in the once bleak upland of Hong Kong, so why not in every corner of the world? In more fertile and resource-rich lands?
In the meantime social scientists still wonder about how countries develop economically, when the key to prosperity should be already known: Economic Freedom. Only in a free society that protects private property can the entrepreneurial spirit of their individuals flourish. As the wants of a society are business opportunities, entrepreneurs direct resources to those productions who are highly demanded by consumers. The ones who satisfy the necessities of the many better or cheaper than the rest will be rewarded accordingly. This dynamic process coordinates the actions of the individuals and, along with capital accumulation through savings and investment, raises the standards of living of everyone. Government regulations and income redistribution policies can only slow down, or even bring to a standstill, the path to prosperity.
Not many countries took (or returned to) Hong Kong’s path, but its success is there to be considered and admired. Even developed countries nowadays have forgotten the path they took once long ago. Determined as these countries are to spread the principles of social justice and redistribution, they forget that production precedes redistribution, that the pie needs to be baked first before you can share it. The recipe is no secret! There weren’t, there aren’t and there won’t be any short cuts to economic progress.
As a conclusion, we can regard Hong Kong as an experiment that solves the dilemma of how would our world have been, had the old one not succumbed to world wars, revolutions and new (destructive) ideals. Go to the city and contemplate the skyline, the skyscrapers will whisper you the answer.
2 comentarios:
Mr Prometeus,
while Hong Kong's recipe seems quite clear and straightforward, the question remains whether it is useful as a universal example at all, given that, for all practical purposes, it was a tiny city-state... protected by a powerful and "benevolent" foreign power (the British motherland, "gracious" enough to grant it a broad autonomy put to good purpose). Even though it is true that the bulk of state expenditure increase in the UK in the post-war years was in areas such as the NHS, education and other "social" services, a tide which Hong Kong resisted (a privilege and "blessing" of limited democracy, one might say), the fact nonetheless remains that Hong Kong enjoyed an implicit subsidy as long as it had the UK's armed forces (and their nuclear deterrent) behind; a deterrent which only a modern nation-state could afford and which came at the expense of the British taxpayer. Hong Kong was, so to say, a military freerider. It can show the way, but only in the measure as the dangers that once threatened it (and which Britain's mere guarantee avoided) disappear.
The scenario of mainland China attacking, defeating and finally occupying a truly independent Hong Kong is not so far fetched, as, for example, a minor European power like Portugal would learn in 1961, losing Goa in a brief and unwinnable war against India which would spell economic doom for the conquered province until India's recent liberalization and the influx of mass tourism.
The case for Economic Freedom is clear; and the desirability of tiny, commercial-oriented city-states as opposed to the modern, Leviathan-style nation-states is undoubted. However, the fact remains that nation-states DO exist, and that in a given scenario where both nation-states and city-states coexist, the military advantage will almost always be in the hands of the former (economies of scale and/or sheer manpower being the main economic forces considered behind this disparity). Why relatively big nation-states have come to exist and dominate the world scene, even if they are a (relative) hindrance in the search for economic efficiency, and why the welfare state has been the favoured choice even if it was only one of the many possible options in their search for legitimacy are questions that need to be asked, and so far as possible, understood.
Singapore, which was actually independent in a relatively untroubled geopolitical setting, would have been perhaps a better example... on the strictly economic front (or not even, because it too relied, at certain moments, in an interventionist and dirigiste "economic policy"). Authoritarian rule, even when it pursues "economically enlightened" policies (such as Pinochet was forced to adopt to avoid collapse after Allende's catastrophical management of the Chilean economy), should not be condoned, because the lack of checks and balances puts a permanent question mark on the vital question of juridical security (a stable and predictable juridical system being one of the premises for a smooth market functioning).
The search for Utopia is not yet over. Hong Kong's future as a beacon for economic freedom is very much at stake, now that it is "back" in the hands of mainland China. Economic freedom with the capacity to protect itself -such as, with all its failings, the USA represents- seems a safer, long-term bet.
(Mr González)
Hong Kong is an universal example of how economic freedom pours the horn of plenty over the most distant corners of the earth. You are right in pointing out that Hong Kong was a "military freerider", but, following the same logic, so was the majority of the Western world during the Cold War. The US was implicitly protecting France, the UK, Italy, West Germany... against the Soviet Union during the first moments of the post-WWII period (and beyond). The US was also protecting Taiwan, South Corea or Japan from any Chinese territorial expansionist attempt. One might say that the "ultimate deterrent" of that period were the American taxpayers and the resulting active foreign policiy of their government.
Goa and Diu was the price to pay for India's support against Red China. The border skirmishes between both countries during the sixties was a clear-sighted proof that India was a useful counterbalance in this part of the world. In any case, I guess that socialist India was too close to the USSR for the US to care, which was busy enough with the Cuban crisis anyway.
It is self-evident that tiny city-states have no chance in military engagements against larger countries or empires. In fact, it is not so clear that democratic countries are more efficient in warfare matters than totalitarian states, as the latter can divert all ressources of the country toward military production without resistance (Europe was defeated by Germany very fast at the beginning of WWII). The fact that relatively big nation-states dominate the world scene explains why city-states as a political entity have disappeared (remember that Hong Kong is nominally part of the People's Republic of China).
Singapur is equivalent to Hong Kong in many aspects. Actually, it ranks second in the world's index of economic freedom and, as it was the case with Hong Kong, it's essentially undemocratic system of government has not been a hindrance to economic freedom, but the opposite is true. Nevertheless, as Mises stated long ago, democracy assures peace better than other forms of government (two democratic governments hace never declared war to each other). The fact of SIngapur and Hong Kong being small territorial entities have also forced them to be economically free. When you don't even have enough land to grow your own food (in fact, land is so scarce there that they have to import it), you need something to offer to the world in exchange for food or you'll starve to death. Another positive aspect of small states (autonomy inside a larger country is also valid) is political competition. Political competition could be a key to economic freedom too...
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