Hong Kong’s Growth Was Due to Cowperthwaite’s “Positive Noninterventionism”

In Free to Choose, Milton Friedman compared Hong Kong’s free market, with India’s state control of the economy.  The dynamism and growth of Hong Kong was a stark contrast to the inertia and stagnation of India.  In the decades since Free to Choose, India has become more free and, alas, Hong Kong less free:   

(p. A14) . . . it was sadly unsurprising to see Hong Kong’s current leader, Donald Tsang, last month declare the death of the policy on which the territory’s prosperity was built.

The really amazing phenomenon is that, for half a century, his predecessors resisted the temptation to tax and meddle.  Though a colony of socialist Britain, Hong Kong followed a laissez-faire capitalist policy, thanks largely to a British civil servant, John Cowperthwaite.  Assigned to handle Hong Kong’s financial affairs in 1945, he rose through the ranks to become the territory’s financial secretary from 1961-71.  Cowperthwaite, who died on Jan. 21 this year, was so famously laissez-faire that he refused to collect economic statistics for fear this would only give government officials an excuse for more meddling.  His successor, Sir Philip Haddon-Cave, coined the term "positive noninterventionism" to describe Cowperthwaite’s approach.

The results of his policy were remarkable.  At the end of World War II, Hong Kong was a dirt-poor island with a per-capita income about one-quarter that of Britain’s.  By 1997, when sovereignty was transferred to China, its per-capita income was roughly equal to that of the departing colonial power, even though Britain had experienced sizable growth over the same period.  That was a striking demonstration of the productivity of freedom, of what people can do when they are left free to pursue their own interests.


For the full commentary, see: 

MILTON FRIEDMAN.  "Hong Kong Wrong."  Wall Street Journal  (Fri., October 6, 2006):  A14.

(Note:  ellipsis added.)


Private Property Rights Would Help American Indians

(p. W11) The main problem with Indian reservations isn’t, as some argue, that they were established on worthless tracts of grassland. Consider the case of Buffalo County, S.D., which Census data reveal to be America’s poorest county. Some 2,000 people live there. More than 30% of the homes are headed by women without husbands. The median household income is less than $13,000. The unemployment rate is sky high.

Just to the east of Buffalo County lies Jerauld County, which is similar in size and population. Yet only 6% of its homes are headed by women without husbands, the median household income is more than $30,000, and the unemployment rate hovers around 3%. The fundamental difference between these two counties is that the Crow Creek Indian Reservation occupies much of Buffalo County. The place is a pocket of poverty in a land of plenty.
Maybe we should give land back to the rez-dwellers, so that they may own private property the way other Americans do. Currently, the inability to put up land as collateral for personal mortgages and loans is a major obstacle to economic development. This problem is complicated by the fact that not all reservations have adopted uniform commercial codes or created court systems that are independent branches of tribal government — the sorts of devices and institutions that give confidence to investors who might have the means to fund the small businesses that are the engines of rural economies.
. . .
. . . the real tragedy is that reservations, as collectivist enclaves within a capitalist society, have beaten down their inhabitants with brute force rather than lifting them up with opportunity. As their economies have withered, other social pathologies have taken root: Indians are distressingly prone to crime, alcoholism and suicide. Families have suffered enormously. About 60% of Indian children are born out of wedlock. Although accurate statistics are hard to come by because so many arrangements are informal, Indian kids are perhaps five times as likely as white ones to live in some form of foster care. Their schools are depressingly bad.
Even if casino revenues were able to address these soul-crushing problems — a doubtful proposition — most reservations are too isolated geographically to profit from big-dollar gambling. Yet the rise of the casinos may help point the way forward: Their ability to flourish contradicts the tenured Marxists in ethnic-studies departments who claim that communitarian Indian cultures aren’t compatible with market capitalism. After all, it takes entrepreneurship to run some of the world’s biggest casinos.
What’s more, this modern-day entrepreneurship is part of a long tradition: Meriwether Lewis (of Lewis & Clark fame) described the Chinooks as “great hagglers in trade.” I once visited Poverty Point, a 3,000-year-old set of earthen mounds in Louisiana; the museum there displayed ancient artifacts found at the site, including copper from the Great Lakes and obsidian from the Rockies. These prehistoric Americans were budding globalizers, and there’s no reason why their descendants should remain walled off from the world economy.

For the full story, see:
JOHN J. MILLER. “The Projects on the Prairie.” The Wall Street Journal (Saturday, January 27, 2006): W11.(Note: ellipses added.)

Industrial Giants Succeeded in Philanthropy in the Same Way They Succeeded in Business

(p. 3) . . . the Gateses were not the first to see that money could sometimes move mountains in public health. They are following in the footsteps of the industrial giants of the late-19th century, said Dr. Howard Markel, director of the University of Michigan’s Center for the History of Medicine.

These men also brought their fortunes to bear on social problems, and believed that they could succeed in philanthropy in much the way they had succeeded in business.
The donors of the robber-baron years started their philanthropy while still alive – a novel idea then. Andrew Carnegie, for example, gave away hundreds of millions of dollars to build libraries long before his death.
The largest bequest in American history prior to Carnegie’s time was from Johns Hopkins, a Baltimore merchant, who left $7 million to found the eponymous university and hospital in 1873 – after he died.
But the closest parallel to the Gates approach to philanthropy is that of John D. Rockefeller, said Dr. Markel and Robert E. Kohler, a medical historian from the University of Pennsylvania.
Rockefeller built Standard Oil. Like Mr. Gates, he was the richest man of his time, and like him he was reviled as a greedy monopolist.
Rockefeller, like Mr. Gates, hired a professional to run his charities. And he, like Mr. Gates, used his money systematically to identify and attack important public health problems.
Rockefeller hired Frederick T. Gates, a former minister (and no relation to the Microsoft co-founder) as his philanthropic executive. Mr. Gates read an 1892 medical textbook that convinced him that diseases had causes, like germs and worms, that could be fought by science – not a universally accepted idea at the time.
The most famous health campaign he started with Rockefeller money was the drive, begun in 1907, to rid the rural American South of hookworm. Called “the germ of laziness” because it caused anemia and made victims lethargic and dull-witted, hookworm afflicted up to a third of Southerners.
The foundation set up clinics that administered purgatives and – because the worm is shed in feces and picked up by bare feet – taught people to dig deep privies and wear shoes. More Rockefeller money underwrote some of the 20th century’s great public health drives, many using research done at Rockefeller University. Clinics were built in 50 other countries to eliminate hookworm worldwide. The effort failed because the worm can survive in soil and reinfect people; but the problem diminished, especially in parts of Asia.
In 1915, the foundation declared war on yellow fever; by 1932, scientists had realized that monkeys were also a reservoir for the virus, making eradication impossible, but by then Rockefeller scientists had invented the vaccine still used today.
Patty Stonesifer, chief executive of the Gates foundation, said she and William H. Gates Sr., the father of the software pioneer and co-chair of the foundation, consider the Rockefeller campaigns especially instructive. “We stood on their shoulders,” she said.
. . .
As Ms. Stonesifer said admiringly of the Rockefeller campaign against hookworm: “A lot of people would say, ‘you’ve got to reduce poverty to get rid of hookworm.’ But the Rockefellers said, ‘You don’t need a 20-year intervention. You can use shoes.’ “

For the full article, see:

DONALD G. McNEIL Jr. “The Rich, Sometimes, Are the Best Medicine.” The New York Times, Section 4 (Sun., December 11, 2005): 3.

(Note: ellipses added.)