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Free Minds & Free Markets

Hong Kong and the Power of Economic Freedom

Hong Kong has surpassed its former colonial master in prosperity because it's had more economic freedom.

The great 20th century journalist, novelist, and travel writer Martha Gellhorn (1908-1998) was no stranger to war, hunger, and disease—all of which she insisted on seeing with her own two eyes. In 1937, she was in Madrid and witnessed the dark denouement of the Spanish Civil War. In 1938, she was in Prague as millions of displaced Czechs, who were escaping from the Sudetenland after the Munich Agreement, crowded the train stations in search of food and shelter. In 1945, she accompanied the U.S. Seventh Army as it liberated the Dachau concentration camp from the homicidal National Socialists.

Gellhorn was one of the world's first female war correspondents and feminists, as well as a force of nature. Her articles are invariably powerful and insightful. Yet the book I always return to is her 1978 memoir, Travels with Myself and Another. In 1941, Gellhorn accompanied her new husband, Ernest Hemingway, on a trip to a war-torn Hong Kong. The city was on the front line, with the imperialist Japanese slowly gaining ground against Chiang Kai-shek's Nationalists. Landing by plane in Hong Kong, she penned the following impressions of a starving city:

The streets were full of pavement sleepers at night. The brothels were small square wood cubicles, lining a narrow passage; $2 a night per man per girl. The crimes were street vending without a license, and a fine no one could pay. These people were the real Hong Kong and this was the most cruel poverty, worse than any I had seen before. Worse still because of an air of eternity; life had always been like this, always would be. The sheer numbers, the density of bodies, horrified me. There was no space to breathe, these crushed millions were stifling each other.

When finally I visited a dank ill-lit basement factory where small children carved ivory balls within balls, a favorite tourist trinket, I could not bear to see any more. I had a mild fit of hysterics.

"They look about ten years old," I shouted at the UC. "It takes three month to make one of those damned things, I think it's eight balls within balls. They'll be blind before they're twenty. And that little girl with her tortoise. We're all living on slave labor! The people are half starved! I want to get out, I can't stand this place!"

UC ["unwilling companion" = Ernest Hemingway] considered me thoughtfully. "The trouble with you, M, is that you think everybody is exactly like you. What you can't stand, they can't stand. What's hell for you has to be hell for them. How do you know what they feel about their lives? If it was as bad as you think they'd kill themselves instead of having more kids and setting of firecrackers."

From agonizing over the lot of my Chinese fellow men, I fell into a state of hysterical disgust with hardly a pause. "WHY do they all have to spit so much?" I cried. "You can't put your foot down without stepping on a big slimy glob! And everything stinks of sweat and good old night-soil!" The answer of course could be that spitting was due to endemic tuberculosis, and as for the stink, I had seen where and how the people lived. I knew I was being contemptible.  

Shortly after Gellhorn and Hemingway left, the city surrendered to the Japanese. British rule returned after the surrender of the Japanese in August 1945. Two years later, a young Scottish civil servant named John Cowperthwaite arrived in the colony to oversee its economic development. Some 50 years later, I met Cowperthwaite in St Andrews, Scotland, where I was a student and he was enjoying his retirement. As he told me, "I came to Hong Kong and found the economy working just fine. So, I left it that way."

Cowperthwaite talked to me about low taxes, a business-friendly regulatory environment, a lack of state subsidies, tariff-free trade relations with the rest of the world, and other policies he promoted during his tenure as colonial financial secretary. Of all the policies that we discussed, one stands out in my mind. I asked him to name the one reform that he was most proud of. "I abolished the collection of statistics," he replied. Cowperthwaite believed that statistics are dangerous, because they enable social engineers of all stripes to justify state intervention in the economy.

At some point during our first conversation I managed to irk him by suggesting that he was chiefly known "for doing nothing." In fact, he pointed out, keeping the British political busy-bodies from interfering in Hong Kong's economic affairs took up a large portion of his time.

Today, Hong Kong is one of the most prosperous places on earth. While it has its share of problems—not least the Chinese government’s recent crackdown on freedom of speech—Hong Kong’s success has been astonishing. In 1950, an average citizen of the city earned 35 percent as much as an average citizen of Hong Kong’s colonial master, Great Britain. In 2015, an average citizen of Hong Kong earned 37 percent more than a typical Briton. The poverty that Gellhorn bemoaned is gone—thanks to economic freedom and peace.

Explore more data like this at HumanProgress.org.

Photo Credit: Steve Webel/flickr

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  • Fist of Etiquette||

    In fact, he pointed out, keeping the British political busy-bodies from interfering in Hong Kong's economic affairs took up a large portion of his time.

    The Lord's work.

  • JW||

    Cowperthwaite worked for ACORN?

  • gaoxiaen||

    If you think Hong Kong was bad, this is how people live in America.

    https://www.youtube.com/watch?v=CJoQOQHQ8oA

  • gaoxiaen||

    I think Charles Manson does a cameo.

  • ||

    No matter the success of free markets or the failure of centrally planned economies, people won't get it. Most people simply can't learn. Our presidential race is being led by a couple of pinko commie POS.

  • Millennial Hipster Vanguard||

    Free markets create huge inequality. One guy has a mega yacht and another guy lives in a one bedroom apartment. Central planning makes sure all common men starve at an equal rate.

  • Princess Trigger||

    Except for the Central Planner.
    Top men need quality liquor.

  • Doctor Whom||

    You don't think the pigs actually enjoy the milk and apples, do you?

  • ||

    `Comrades!' he cried. `You do not imagine, I hope, that we pigs are doing
    this in a spirit of selfishness and privilege? Many of us actually dislike milk
    and apples. I dislike them myself. Our sole object in taking these things is
    to preserve our health. Milk and apples (this has been proved by Science,
    comrades) contain substances absolutely necessary to the well-being of a pig.
    We pigs are brainworkers. The whole management and organisation of this farm
    depend on us. Day and night we are watching over your welfare. It is for your
    sake that we drink that milk and eat those apples. Do you know what would
    happen if we pigs failed in our duty? Jones would come back! Yes, Jones would
    come back! Surely, comrades,' cried Squealer almost pleadingly, skipping from
    side to side and whisking his tail, `surely there is no one among you who wants
    to see Jones come back?'
  • Loki||

    Top men need quality liquor.

    And Beluga Caviar, top shelf prostitutes, drugs, and double the rations of the "common masses". Because they need to be able to function at their best in order to plan the lives of everyone else down to the last detail.

    FORWARD, COMRADES!

  • CatoTheChipper||

    And their very own tricked-out Boeing 747 for vacation and other travel.

  • Mustang||

    This is what I don't get about people these days. They have millennia of human history to show them how central planning in any form destroys lives and within a couple of centuries (if that even) the advent of free-market capitalism has swept aside all of it and elevated the largest portion of the population to the healthiest and wealthiest it's ever been. Despite all of that, they are now demanding a return to the same central-planning policies that have kept humanity in the dark for thousands of years. I just don't get it.

  • UnCivilServant||

    The plan is certainty. The plan is knowing what the future brings.

    A decentralized, emergant economy is scary, unpredictable.

  • Loki||

    So, you're saying they offer the world ORDER...

  • CatoTheChipper||

    In reasonably prosperous countries, many children never grow up. As they grow older, the expect the State to provide for them as their parents did. Sadly, it is pretty much that simple.

  • Mindyourbusiness||

    "As the Dog returns to his vomit, and the Sow returns to her Mire,
    And the burnt Fool's bandaged finger goes wabbling back to the Fire...

  • Scarecrow & WoodChipper Repair||

    Because that is the natural outcome of a coercive monopolistic government. Everything it does requires stomping out competition, and because everything it does is one-size-fits-all, everything it does creates new problems which only it is authorized to solve.

    Because it sticks its nose into more and more of everyday life, people learn that it is better to enlist the government on their side against everyone else instead of antagonizing the government by fighting it and thus losing yoru benefits. Most people would rather get on with their lives and mind their own business even while they gossip and tsk-tsk about other people's loose morals, but myob is a losing proposition with a coercive monopolistic nanny government.

  • DJF||

    How can this be, Hong Kong does not have open borders immigration policy with neighboring China! I have been reading that what every successful country needs is open borders with counties with large amounts of cheap laborers

    Tear down those walls Hong Kong!

  • UnCivilServant||

    Technically, Hong Kong has a moat*.

    *okay it's part of the sea, being an island, but the function is the same

  • commodious spittoon||

  • Harun||

    Yeah, except for Kowloon, you know, the part of Hong Kong that is a peninsula that is connect directly to China.

  • gaoxiaen||

    Tear down that Walled City!

  • WhatAboutBob||

    Obviously you don't attend enough D.C. cocktail parties with the Reason staff!

  • JW||

    I'll leave unstated the witless irony of commenting on an article about how the absence of brutal central planning led to wealth and success, with a comment clamoring for more brutal central planning.

    I'm sure that your flavor of central planning is all puppies and rainbows.

    OH NOES DEY'LL TAEK ARE JERBS!

  • pan fried wylie||

    The power of economic freedom via the freedom of economic power.

  • pan fried wylie||

    While it has its share of problems...

    Ugh, I'm tired of hearing about all these places with problems, where are the articles about Utopia already, I mean, come on.

  • pan fried wylie||

    In 2015, an average citizen of Hong Kong earned 37 percent more than a typical Briton.

    Clearly the dole isn't paying out enough.

  • UnCivilServant||

    It ran out of other people's money.

  • pan fried wylie||

    The. Nerve.

  • Doctor Whom||

    life had always been like this, always would be.

    Many people actually believe something along these lines. Economic activity doesn't generate wealth; the law of conservation of wealth is absolute until Top. Men. step in and work their government magic.

  • AlmightyJB||

    Thank you Hong Kong Phooey!

  • Suell||

    More Hong Kong less Trump poor favor reason.

  • phimepodri||

    Fantastic work-from-home opportunity for anyone... Start working for three to eight hr a day and get from $5000-$12000 each month...HU Regular weekly payments... You Try Must......

    --- W­W­W.A­l­p­h­a-C­a­r­e­e­r­s.C­O­M

  • Uncle Milty||

    I'll always remember Milton Friedman's PBS series, Free To Choose, and his visit to Hong Kong to show the emerging success of a free market economy. Clearly, HK is a a tiny island nation that does not lend itself comparably well to a nation the size of America. But, as Friedman taught us, a state planned economy is inherently bad because it violates the basic economic principle of market forces such as competition and supply/demand. When the state is the only player, there is no incentive to cut costs, innovate, or create. Rather, the state's objective is to further justify itself and grow bigger, always at the expense of the citizenry.

  • Wesley Mouch||

    The reason for the success of the Hong Kong economy is that it's just a great place to do business. Free port with minimal restrictions, sound banking system with available capital, low tax rates and minimal regulations (compared to other markets), reasonably honest legal system, private property rights and minimal bureaucracy. It is easier to ship products to Hong Kong than many other ports.

    The same thing could happen here in the US. It really could. If the politicians would only quit looking out for us.

  • Harun||

    Its probably more realistic to compare Hong Kong to London.

    A city to city comparison.

  • Uncle Jay||

    RE: Hong Kong and the Power of Economic Freedom

    How dare they do better than their past colonialist masters!
    Don't they know socialism not only creates economic stagnation but eliminates freedom as well?
    Shame on them!

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