A better way to trade
Image: Unreal Hong Kong
We were not surprised when the Doha multilateral trade talks broke down. Too many cooks spoil the soup. And the ingredients weren't very tasty in the first place.
Yesterday the Wall Street Journal wrote about a city that is a "tiny outpost of radical thinking" and "an excellent vantage point for the recent collapse of the multilateral trade negotiations".
Hong Kong is essentially irrelevant to trade talks because it practices unilateral free trade, with virtually no tariffs or other barriers. People here understand that imports, exports and the rigors of comparative advantage create individual opportunity and wealth. Enough, in Hong Kong's case, for it to have evolved under almost pure free trade from a rocky harbor into one of the wealthiest places on earth.
But Hong Kong was not always the prosperous place it is today. William McGurn wrote about 1950s Hong Kong -
By any measure, the future for this Asian country looked bleak. Enormously overcrowded, its normal population had skyrocketed, increased not just by a naturally high birthrate but also by revolution in a neighboring country - forcing thousands of desperate refugees upon its borders. Lacking natural resources and utterly dependent upon its unpleasant neighbor for water and food, the country's situation had deteriorated so badly that a local UN official declared the only way for it to survive would be with massive Western aid. An American newspaper proclaimed the country to be 'dying,'. . .
There was, however, a British administration and the rights and protections of common law. There was also the inestimable Sir John Cowperthwaite, Financial Secretary of the Crown Colony, who arrived in 1961. He did not respond as Democratic candidates in America or Labour MPs in Britain would respond to this sort of crisis – with promises of big government programs.
Cowperthwaite was a classical free-trader in a tradition that stretches from Adam Smith to Milton Friedman and Sir Keith Joseph. Like them Cowperthwaite believed that The only cases where the masses have escaped from grinding poverty. . .the only cases in recorded history, are where they have had capitalism and largely free trade. . .There is no alternative way of improving the lot of the ordinary person that can hold a candle to the productive activities of the free-enterprise system – and productive, creative and energetic people ruled by just law.
Under Cowperthwaite’s administration Hong Kong became a city with six million prosperous and largely peaceful citizens under a non-interventionist government whose foundation was British common law. it was also knit together with the institutions, charities, trusts, schools, associations and societies that help people to help each other.
Unfortunately Britain has become the tail on the dog of the EU, so what the EU does or does not achieve trade-wise at talks such as Doha adversely affects Britain. Instead of establishing the best trade policies for Brits, which judging by Hong Kong would be free, fair and unilateral (and fair for the struggling people of third world countries as well), Britain increasingly is left with the remnants of trade in the Eurozone, which, according to the latest financial reports, is taking on water and in danger of sinking.