With presidential candidates vying for the best economic policy, perhaps they should take a page out of the book of John James Cowperthwaite, the hero of Hong Kong’s economic policy that has made them the envy of the world, as I mentioned earlier. Cowperthwaite was a strong advocate for positive non-interventionism, a philosophy that recognized the power of free markets while realizing that proper infrastructure and light regulations were sometimes essential to facilitate market decisions.
Cowperthwaite argued that the government needed a demonstrable competitive advantage to justify every intervention into the economy, and that very few of these demonstrable advantages existed. To facilitate this policy, Cowperthwaite famously refused to allow Hong Kong’s Ministry of Finance to collect official economic statistics, arguing that offering policymakers more information about private industry would encourage them to meddle. He also kept taxes low, refused to impose any tariffs, and focused his efforts on innocuous tasks, like building roads.
Cowperthwaite realized that businesses fail, but noted that:
In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralized decisions of a government; and certainly the harm is likely to be counteracted faster.
The result was immense. Despite being devastated by Japanese occupation and war, a massive refugee influx, no natural resources to speak of, and overcrowding, Hong Kong grew rapidly through the ’60s and ’70s, establishing itself as an economic heavyweight, developing first-world standards of living and attracting large amounts of foreign investment. Today, Hong Kong continues to serve as a model for other Asian economies.
If presidential hopefuls want to make a strong case for growth, they should take a page out of Sir Cowperthwaite’s book—focus on the lubricant that keeps the economy moving and stay out of everything else.