Asia, Economics, History, Top Stories

Goodbye to Hong Kong?

I shall always regret not visiting Hong Kong while it was still under British control or while the city remained the “Hong Kong Special Administrative Region of the People’s Republic of China.” For reasons I will get into below, I feel a special affection for the city, and will mourn the loss of its political autonomy and, potentially, the end of its economic prosperity.

For classical liberals, Hong Kong had been a beacon of hope for half a century. Peter the Great is said to have built St Petersburg to be “Russia’s window to the west.” Hong Kong was supposed to be liberalism’s window to the future. The city’s fabled wealth was built on four pillars of classical liberalism: limited government, rule of law, free trade, and fiscal probity. And, it worked! We hoped that the rest of the world would follow a similar path.

When Britain obtained the territory following the First Opium War (1839 – 1842), British Foreign Secretary Lord Palmerston denounced the acquisition as a “barren rock with nary a house upon it” that would never “be a mart for trade.” He was right—at least for the first 100 years.

In 1941, Martha Gellhorn, an American war correspondent, 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… 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 [Unwilling Companion = Ernest Hemingway]. ‘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!’ … 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.

And then, things changed. By the time of the Hong Kong hand-over to the Chinese in 1997, the average Hongkonger was 12 percent richer than a typical Briton. Last year, the people of Hong Kong were, on average, 46 percent richer than the British. The poverty that Gellhorn described was not “eternal” after all. But, Hong Kong’s emergence from destitution to one of the world’s richest territories was no miracle. The city became a success due to a thoughtful application of liberal principles.

I first heard about Hong Kong’s success as a post-graduate in St Andrews. (My undergraduate education in Johannesburg was more conventional, focusing on the evils of global capitalism rather than the prosperity it bestowed upon those who partook in it.) By the early 2000s, Internet was good enough to watch online videos, including Milton Friedman’s timeless “Free to Choose” series. In one of the episodes, Friedman travelled to Hong Kong to admire its rise from poverty. He did so in 1980 and could not have known that the city’s best days lay ahead.

Friedman noted that Hong Kong’s success did not happen by chance and credited a British civil servant, Sir John Cowperthwaite, with instituting a laissez-faire system of governance while the latter was the colony’s financial secretary (1961 – 1971). Since then, I learned that Sir John was not alone. His predecessors as financial secretaries, Geoffrey Follows and Arthur Grenfell Clarke, as well as Sir John’s hand-picked successor, Philip Haddon-Cave shared a similar (if less principled) commitment to laissez-faire.

There was a reason, I suspect, why Friedman focused on Cowperthwaite’s role. That reason was the damnable decade of the 1960s. It was one thing to promote and defend limited government in the liberal 1860s or the post-stagflation 1980s. The 1960s were an altogether different kettle of fish. Britain, at that time, had a socialist government, the Soviets sent a man to space, and Britain’s African possessions were opting for independence and communism. Meanwhile, Hong Kong, with its low taxation and regulation, competitive enterprise and free trade, and modest income redistribution and budget surpluses, was an anomaly.

Cowperthwaite knew that—or so he told me when I visited him at his home that was located, to my astonishment, three doors down from my university dorm. Having retired to St Andrews, the location of his alma mater, after he left the civil service, Cowperthwaite led a self-facing life. Having graciously agreed to see me, he expressed his frustration with others’ glib (though amusing) comments that he helped to usher an era of prosperity to Hong Kong by “doing nothing.” In reality, he said, his hands were full fending off incessant attempts of the British government to import socialism to the colony. By standing firm, he bought Hong Kong precious time. By the early 1970s, the British soured on socialism. Likewise, the USSR was revealing the limits of central planning. Most importantly, the economic success of Hong Kong was beyond question. And so, laissez-faire remained.

I do not know how Hong Kong’s success impacted Margaret Thatcher’s reform agenda in Britain, though it is likely that the people who advised the future prime minister must have been aware of the city’s experiment with liberalism. The Red Chinese certainly knew what was going on. On one side of the border with the colony, gleaming towers of commerce and untold riches. On the other, destitution and firing squads.

Paradoxically, it was Lady Thatcher who, bowing to reality, acceded to the handover of the colony to the communist despots in 1997—with the proviso that Hong Kong would remain autonomous until 2047. Perhaps she thought that time would transform China into a wealthy and free country. If so, she was only half right. Today, it is the newly enriched and confident mainlanders who are strangling the city’s freedom and vitality—27 years ahead of schedule.

In the short to medium term, the clouds over the city are very dark. In the long run, who knows? Palmerston could not have predicted Hong Kong’s rise. Who are we to predict its destruction? Nothing is permanent—not even the tyrants in Peking!

 

Marian L. Tupy is editor of HumanProgress and a senior policy analyst at the Center for Global Liberty and Prosperity.

Feature photo by Carl Nenzen Loven on Unsplash

Comments

  1. True. Equally true of all other places. The origin story of every country and territory is ugly and violent: there isn’t a place on Earth that didn’t once belong to someone else and was taken by force. Thus I don’t think it is correct to judge a territory by how it came to be. More important is what a place is and what it may yet become.

  2. @Jake_Dee: You make valid criticisms here, but in my opinion they do not address the central topic of the article, namely the factors that were central to Hong Kong’s flourishing and that are threatened today: “limited government, rule of law, free trade, and fiscal probity”.

    For this it is hardly decisive how the area originally came under British control or which persons on the Chinese side were involved in the negotiations. If the subject of the article were the whole history of Hong Kong, it would of course be different.

    But it seems that the demonstrators in Hong Kong are fighting for something from the British heritage that they do not want to lose, such as democratic freedoms. Even if the people didn’t have them during the entire British rule, but “only” during its last decades - they seem to appreciate them very much!

  3. Straw man. Where the rule of law comes in and relates to what now exists in peril in Hong Kong is in relation to the economic activity and prosperity which developed there after the British seized the territory. And that economic activity and prosperity has overwhelmingly been beneficial to Chinese people and the Chinese economy, even of the Mainland. Which is why the then government of the Mainland agreed to the terms of British withdrawal, so as not to kill the goose that was laying the golden eggs, not for fear of the strength of the British Navy in 1997. Now that the Mainland economy has burgeoned all over China to the point where the Mainland government is engaged in mercantile overseas colonialism itself, it is no longer afraid to kill and eat that Hong Kong goose.

  4. I visited family in Hong Kong in 1994, and it was an amazing place. Internet was more advanced than in the UK, in common use and entirely free for high end services. Income Tax was a maximum of 15%, although the equivalent of Road Tax was rather expensive. Most people used laser discs, rather than video for rentals.

    My aunt took me to a multi-storey car park, where you could feel the jetwash from planes coming into land at the old airport. The shops and restaurants were amazing. A visit to a local wet market included an appalling smell. My aunt and uncle would remark on entirely new commercial buildings completed since the last time they were in the area, a month ago. We went to an expat bar, where the band playing was the MD’s. “Doctors?” I asked. “No, Managing Directors” was the answer. I bought an Abercrombe and Fitch jacket as factory surplus from Stanley Market for the princely sum of £30. The only difference was the label had a whole punched through it, on the inside of the jacket.

    At the time, Britain was stale and drab by comparison- still recovering from the housing market finally bottoming out in 1992. However Hong Kong came into being, it was very much the Shining City on the Hill, historically free from the baleful influence of Socialism and misguided Keynesian policies and wealthier throughout the citizenry as a result. Many wealthier Chinese Hong Kong citizens subsequently bought UK property as an insurance policy, and many subsequently moved to the UK. I’m sure they were just as welcome in the US.

    Those with wealth have usually amassed a hoard of personal human capital as well, after all, and are often the most successful at integrating to become ideal citizens, wherever they live.

  5. I add that, as an Israeli, we had so far treated the promises of well-meaning nations to fight and die to save us if we only give the Arabs what they want with great skepticism, for just this reason. Remember Czechoslovakia, Poland, etc.?

  6. All things which “progressives” - the new name for Marxists - despise.

  7. I thought the same. Anno 2020, Hong Kong is absolutely superior to China in terms of its political and economic system. A beacon of light in an otherwise repressive country, one might say.

  8. And what a lucky thing that turned out to be for the people of Hong Kong and their descendants.

  9. It is suspiciously outrageous that the whole world erupts in BLM protests at the same time Hong Kongers are protesting a real systemic assault on their human rights. How can this go so unremarked, especially on the anniversary of the Tiananmen square massacre? It’s almost like we were distracted.

  10. I think at this point you have now obligated yourself to establish your credentials as a Chinese person, to assure us that you’re not engaging in your own appropriation.

    I had presumed the author to be a ciswoman by the name. And then when I realized he’s some young blond dude at the Cato Institute I about laughed my head off.

    And while you’re at it, would you be so kind as to establish your credentials as a ciswoman, or something other?

  11. I don’t think Quillette’s raison d’etre is standing against racism, and I don’t think they commission articles.

    Your specific criticisms are well-received, but they do not support this conclusion. How can you know how the author feels? Why is it necessary to racialize the participants and the conversation?

    Why did you assume a feminine-sounding name would belong to a cis as opposed to a trans woman? It sounds to me like you expect trans-names to be noticeably distinct from cis names. Are you passing judgement on the names transwomen choose? It seems you have some internal bias to examine.

  12. Yeah, I’ve been following Quillette on Twitter for some time, apparently, but their tweets don’t seem to float onto my feed often. This was signal boosted by a few rather flabbergasted Asian friends and when I read it, I was also startled.

    I’d usually link you to my Twitter account but it’s currently on lock-down so you’ll just have to trust that I’m white/American because:

    • I know every word to “Friends in Low Places”
    • I did not hear 2Pac’s Dear Mama until age 26 in the back of an Uber
    • the first time someone asked me “what’s Gucci?” I said “A brand?”
    • I have an entire drawer devoted to sunblock and bronzer

    (bear with me, Stephanie, I’m a n00b and trying to consolidate my quotes as the helpful sidebar suggested)

    I have to deal with the thoughts and feelings of the author so heavily because the author isn’t building upon personal experience or what I see as a plethora of facts and research. I’m responding to his ideals of freedom and libertarianism being draped over Hong Kong.

    He’s not wrong per se–Hong Kong was one of the last major cities to have drunk driving laws, and even then only because the lack of the law backfired on them (if you’re interested in the story / libertarian ideals in general, I’ll look up the case for you. It’s fascinating but a bit of a detour) but I dislike that he’s ignoring so much of how the local culture contributed to that. There’s a reason the term laissez faire is not said in the Queen’s English–it’s not a very British concept, is it?

    I think this author could have had a really interesting article if he’d also researched WWII era Hong Kong and discussed how the reaction to Japanese imperialism colored the attitudes of locals. Sadly, he did not.

    As for the name, my internal bias is that I find Marian to be a very stodgy, old-fashioned name. The type of name handed down for generations to unfortunate daughters. I presumed that someone getting to select their very first name as a woman, having plenty of time to think it over, would steer clear of such a name. Forgive me, Marians of the world.

  13. Why, thank you, I’m really enjoying it thus far, the amount of effort put into discussion and thought out arguments here is already really impressing me. I’m going to have to learn things like threading and responding to multiple replies at once, I’m finding.

    As for the presumption being irrelevant, I’d be more likely to characterize it as prudent. There are so, so many state accounts on social media these days. --and they’re getting much better at blending in. While most are harmless, they’re all still collecting data to use for the ones that spread disinformation. I’ve got a few tips on handling the Twitter-based accounts, if you’re also present there and start having trouble with them. I’d be happy to share.

  14. Thank you, but I believe Twitter to be a bottomless whirlpool of existential despair.

  15. A definition of aggression would also be useful.

    The initiation of physical violence: it excludes (proportional) self-defence.

    & ‘aggressive’ trading can be done only with someone who still wants to trade: if she finds the ‘aggression’ too much, then she can always change her mind about trading with the ‘aggressive’ trader.

    Once I was in the process of buying an used Honda Civic back in Hungary. It became obvious to me quite quickly that the seller guy was an unlicensed used car dealer; he was telling me that he’s selling the car belonging to his ‘niece’ but he pulled too many stunts the proverbial used car salesman pulls. But I was still interested in buying the car, so I let him have his little verbal tricks. We got to the point of doing the test drive when he proposed to drive halfway & letting me drive the other half. I said OK, but what he did was drove in a loop of a few clicks (kilometres) & exchanged seats with me for the last couple of hundreds of meters leading back to his place, our starting point. On top of that, that was on side roads where I couldn’t even do a sturdy acceleration with the car. So I turned to him & said “I’m going around once more” – at which he started to explain to me that the remaining distance ought to be enough for me; he doesn’t want me to do another loop. I just asked him: “do you want to sell the car or not?”, thereby making it clear that I’ll not buy it without test-driving it a meaningful distance. He huffed & puffed but let me do the driving for another turn. I did buy the car, too (although it had such a large hole in the muffler that I had to get it exchanged for a new one immediately after the purchase – but I calculated that into the total cost for me of buying the vehicle).

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