Since July 2016 Dr. Elsasser publishes videos regulary. Please click on "Video"-Button.
Do you want to read the blog? Just click on the headline and you will get the complete article.
We are happy to inform you about future blogs and videos. Send us an email and we shall keep you updated.
The Mentor of Hong Kong. Hall of Value Fame - Sir James Cowperthwaite
Monday 7 September 2015
Who created the conditions for decades of prosperity and dynamism in Hong Kong? A man of whom you have certainly never heard of:
Sir James Cowperthwaite (1915 - 2006). Who was he, and what was the basis of his successful model?
The Swiss financial newspaper "Finanz und Wirtschaft" in its issue of April 25 this year, described the achievements of this pioneer Sir James Cowperthwaite.
James Cowperthwaite was sent by the British Government in 1946 to Hong Kong. From 1961 to 1971, he was the State Secretary of Finance (Financial Secretary, a sort of Minister of Finance), responsible for the economic fortunes of the colony. His main concern was to prevent the follies and mistakes made by other governments.
Unfortunately I have never had the opportunity to meet Cowperthwaite in person, but I was living in Hong Kong at the same time (in the sixties). At that time Hong Kong had some two million inhabitants, today there are eight million. As a young man I clearly felt the pulse of the economy. Hong Kong, with its free economic order, gave you the feeling that all doors were open for the swift and the brave, that certainly influenced me.
Sir James Cowperthwaite hated national statistics. In Hong Kong he only referenced very few data points. He was of the opinion that statistics were dangerous because they only provided pretexts for intervention by the state. If the state suspected irregularities, politicians would interfere with market forces. Cowperthwaite had an absolute confidence in the market and a general distrust in the Government bureaucracy. He was convinced that “the aggregate of decisions made by individual businessmen, as personal judges in a free economy, even though often wrong, would in the long run cause far less damage than any centralist decrees from the Government, and would certainly quickly fix any damage caused.” Cowperthwaite was, and still is, correct. Whoever needs to convince himself of this can book a flight to Hong Kong and see it for themselves.
What is often forgotten is that in the postwar years the median income in Hong Kong was far below that of Great Britain. In the era of decolonization, the left Swedish economist and Nobel laureate, Gunnar Myrdal predicted the rise of Africa and the descent of Asia. Cowperthwaite was undeterred. He relied entirely on "positive non-intervention": Low tax rates, no tariffs, no subsidies, no public debt, no cumbersome bureaucracy. He put in place clear principles which were taken to heart by his successors. The result: Hong Kong overtook the economic income of the UK, which - until the arrival of Margaret Thatcher – was locked
in an interventionist quagmire.
The young African States languished. Cowperthwaite even gave the communists in Beijing good reason to examine their premises. Since the political change in 1997, the regime in Beijing have left the Hong Kong economic structure intact. But above all, it was the success of Cowperthwaite with his laissez-faire policy in stark contradiction to the Marxist-Maoist plight of the People's Republic at that time, where Chairman Mao had not prevailed. As you can see today, China has learned from Cowperthwaite. But what about us in Europe today?
Without a doubt, Sir James Cowperthwaite deserves a place in my Hall of Fame for adding Value.