O que é este blog?

Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org. Para a maior parte de meus textos, ver minha página na plataforma Academia.edu, link: https://itamaraty.academia.edu/PauloRobertodeAlmeida;

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Mostrando postagens com marcador desenvolvimento. Mostrar todas as postagens
Mostrando postagens com marcador desenvolvimento. Mostrar todas as postagens

quinta-feira, 31 de maio de 2018

Como o Ocidente se tornou rico? Um receituario da melhor economista do mundo...

How the West Got Rich by Following "the Four Rs"

We got rich because of a combination of reading, revolt, reformation, and revolution, which came together to cause us to rethink the bourgeois lifestyle.

For as long as there have been people there have been innovators, and for as long as there have been innovators there have been those who have sought to stop them. Until recently, the forces of resistance have won.
Beginning largely in the 18th century, however, there was a largescale shift in how we write, think, and speak about commerce. Societies in Western Europe—Britain, most notably—embraced an ethic of innovation, the Bourgeois Deal: “leave me alone, and I’ll make you rich.”

The Bourgeois Deal

Here’s the Deal, thinking about society in three acts:
“In Act I, allow me, an innovator and member of the bourgeoisie, to act on the hunch that I can do this a little or a lot better than it has been done before. In fact, allow me to act on the hunch that I can come up with a completely different and better way of living. Do not interfere with me, and do not interfere with those who wish to stake their hard-earned and hard-saved money on my idea.
In broad strokes, though, embracing innovation has unleashed the creative forces of the human mind in ways that have enriched… everyone. 

“Do not interfere with those who vote with their money for my idea. Allow me, in other words, to creatively destroy. I accept, reluctantly, that my successes such as they are will attract competition from imitators and other innovators in the second act, and this competition will erode my profits. By the third act, however, we will all have been made better off by my venture.”
There are, of course, all sorts of problems with this—perhaps the most obvious is that it is hard to ensure credibility, as the creative destroyer has, in Act II, an incentive to work with the government to create barriers to entry with the effect being that in Act III we might be better off, but not as much better off as we could be.
In broad strokes, though, embracing innovation—even “embracing” it as nervous teenagers do at a Junior High School dance where they sway back and forth at arm’s length from one another—has unleashed the creative forces of the human mind in ways that have enriched… everyone, not just the barons and baronesses and kings and queens and clerics.

The Aristocratic Deal

Contrast this to the Aristocratic Deal, which basically says, “honor me, an aristocrat and your better by the accident of birth; do as I say; pay your taxes under threat of prison or death or worse. Think not that you have the right to seek ‘protection’ from another sovereign. Go forth, do battle, and shed others’ blood and your own in my name and for my glory, and by the third act, I at least will not have slaughtered you.”
Our ancestors and the kings and queens and generals who ruled them were broadly and often deeply suspicious of innovation. 

Our ancestors and the kings and queens and generals who ruled them were broadly and often deeply suspicious of innovation. Indeed, the word itself originally meant something bad, as innovation in interpreting scripture meant the introduction of unorthodox or even heretical elements.
There were markets, yes, but entry was largely controlled by guilds and other interests that were able to earn above-normal profits for themselves by restricting entry. Such sophistry led Adam Smith to write An Inquiry into the Nature and Causes of the Wealth of Nations.
There are five textbook institutional prerequisites for a flourishing economy: secure property rights, open and competitive markets, political stability, honest government, and a dependable legal system. We don’t yet know the “right” mixes of the institutional causes of wealth and poverty, but insecure property rights and restricted access to markets can very clearly lead to stagnation rather than growth.

Commerce Became Socially Acceptable

These are the tinder, so to speak. The rhetorical change—where we began to esteem innovators and the bourgeoisie—was the spark that lit the fire. The British became, over this time, “a polite and commercial people.” Buying low and selling high went from being something morally suspect and undignified to something worthwhile.
Anyone with an idea and enough spare time to tinker in the garage can change how people live, work, play, and encounter information. 

We see this in the United States today when we consider who we want our children to emulate. We heaped and heap great laurels on people like Henry Ford, Sam Walton, Bill Gates, Steve Jobs, and Warren Buffett. We live in a country where anyone can grow up to become president, but much more importantly, we live in a world where anyone with an idea and enough spare time to tinker in the garage can, as Jobs and Gates ultimately did, change how people live, work, play, and encounter information.
The Bourgeois Deal is radically egalitarian. Market exchange embeds a deep and important assumption: that one party to a trade is within his or her rights to refuse or to hold out for something better. It’s a right denied to soldiers and slaves, or peasants who have no option but to trade their labor for “protection” by a sovereign who would kill them should they seek a better deal elsewhere.

We Are Optimistic

Ebenezer Scrooge was wrong: there is no such thing as a “surplus population” when we allow markets to work. 

Modern economic growth happened and continues to happen in spite of an unending stream of pessimistic predictions—that we are destined for subsistence, that the final crisis of capitalism is upon us, that this time is really different and we can expect to see all the jobs go away because of technological change, that we are gaining the world and losing our souls because we are so blinkered and blinded by consumer goods, and that we are destroying the planet in our pursuit of more, more, more. Literally: these are from chapter 7 of the third edition of Tyler Cowen and Alex Tabarrok’s 2014 book Modern Principles: Macroeconomics.
Ebenezer Scrooge was wrong: there is no such thing as a “surplus population” when we allow markets to work. The economist Julian Simon (1996) referred to the mind as the “ultimate resource,” for from it springs everything else in the world that we call a “resource.” Something isn’t a resource until we can think of a way to make it satisfy human wants. Until then, it’s just a collection of atoms and molecules and stuff. Embracing innovation set us free from a Malthusian/Hobbesian existence in which life was solitary, poor, nasty, brutish, and short. It will continue to overcome resource barriers that confront us, just as it has historically.
We are optimistic for a few reasons. First, with Peter Diamandis and Steven Kotler, we are extremely optimistic about the future that lies ahead of us because, within the next few years, billions of people will be connecting to the global Great Conversation that is already happening on the internet. Somewhere in Haiti, or Rwanda, or rural India, or even American Appalachia, a child has been born in the last few days who will have a far greater impact on the lives of everyone in the world simply because she will be born into a society that has embraced liberty and innovation to a degree greater than those who have come before.
We have overcome and will continue to overcome environmental challenges as long as we keep our ethical wits about us. 

We hope for further progress so that those who are today left behind are tomorrow offered a seat at the table. Our prosperous modern world aided and abetted by our ability to communicate instantly with almost anyone almost anywhere provides us with an unlimited array of new ways to self-author.
The big winners, we think, from the 21st-century version of the Bourgeois Deal are those whose tastes and preferences lie outside the mainstream. There have developed on Reddit and YouTube and elsewhere a whole array of online communities devoted to even the most esoteric of topics. If you can think of it, there’s likely a Reddit forum, or Facebook page, or YouTube channel devoted to it.
And if there isn’t, creating one is easy. Technology and commerce have limited us from the soft tyranny of geography and birth and enabled us to connect with people the world over who share our preferences. This might not be too big a deal for someone with close-to-the-mainstream preferences, but for an 18- or 19-year-old male “Brony” who likes My Little Pony: Friendship is Magic, the value might come in knowing you’re not alone.
In spite of the possibility that global warming could be very, very bad, we are, with the science writer Matt Ridley, Rational Optimist(s). We have overcome and will continue to overcome environmental challenges as long as we keep our ethical wits about us. Anti-capitalism has been cloaked in the rhetoric of environmental defense when, it can be argued and even shown, that better protection of private property rights and a stronger rule of law are necessary if we are to defend the environment.

The Four (Plus One More) Rs

Furthermore, the Bourgeois Deal encourages the kind of innovation that can make us less reliant on fossil fuels and mere material. If resources become a constraint and as people get richer, they will substitute better for more, and continued innovation in areas like cloud storage (e.g. Dropbox and Evernote), online document signing (e.g. DocuSign), e-books, and online textbooks will mean lower demand for paper, chemical-intensive paper processing, and the fuel burned to move books around.
We got rich because of reading, revolt, reformation, and revolution, with these four Rs coming together to create a fifth R, revaluation of the bourgeoisie. 

Electronics come with their own sets of environmental problems, of course, but with secure property rights and competitive markets, people will develop ways to recycle electronics components efficiently and effectively.
Economic change comes from a mix of material and rhetorical and ideological factors. So what was it that enabled us to become rich? We got rich because of a combination of reading, revolt, reformation, and revolution, with these four Rs coming together to create a fifth R, revaluation of the bourgeoisie and of bourgeois life. Respect others’ liberty to create, even if such creation has a destructive element to it, and in the long run, we will all be richer.
Moreover, don’t impose too heavy a social tax on the bourgeois values of buying low and selling high (prudence, in other words), and we will see more people direct their time and energy toward making the world a better place for all of us.

The Glorification of "Honest" Work

From the 18th century onward, the West was brined in the rhetoric of prudence, of oikonomia, of its close cousin phronesis, or practical wisdom. It wasn’t always so. Ancient societies did not trust the bourgeoisie or bourgeois life. Neither did Shakespeare or others of his day. To work in the world of Plato or Aristotle was low, meager, undignified, lacking in honor. Contrast this with the rhetorical honor heaped upon hard work today in the maxim, “an honest day’s work for an honest day’s pay.”
“Honest” in this sense means virtuous in that one adheres to the truth, but it can also be used in its older sense of “being worthy of honor, dignity, or respect.” There was a shift in the 18th century in the way we have come to read, write, and speak about commerce, about betterments tested by trade in the crucible of the market.
Figures like Steve Jobs and Bill Gates and Warren Buffett and others are, in spite of failings and limitations, admired for their innovation. 

We see in the development of what we read and wrote that “Free innovation led by the bourgeoisie became at long last respectable in people’s words” (McCloskey, 2010: 386). The innovators became gentlemen (and women), or people of esteem. This was fueled, as Joel Mokyr shows, by a pan-European republic of letters, intellectually integrated but politically fragmented (and therefore competitive), that developed the view that progress is possible and progress is desirable, even for those whom Aristotle might call fit only to be ruled.
In short, we came to praise (or at least tolerate) dissent with modification, such that figures like Steve Jobs and Bill Gates and Warren Buffett and others are, in spite of failings and limitations (which, in Jobs’ case, included pathological inattention to family responsibilities for some time), admired for their innovation. Buffett’s modesty and prudence—as one of the richest men in the world, he still lives in the modest Omaha home he bought in the 1950s—are sources of esteem where ostentation and pomp and circumstance would have in many other contexts been the calling card of the elite. The world is complicated by the fact that these are not wholesale changes.
The villains in books and movies are far too often the heads of large corporations bent on poisoning the children for fun and profit. But that said, even the rhetoric of business and of prudence has changed. The most influential book after the Bible has been, for many people, Atlas Shrugged. TV shows allowing the viewer to gawk at the excesses of “extreme couponing” nonetheless celebrate the couponers’ thrift and hold it up, perhaps, as something to be emulated, or at least admired.
This is an extract from Chapter 10 of ‘Demographics and Entrepreneurship: Mitigating the Effects of an Aging Population’
Art Carden
Art Carden is an Associate Professor of Economics at Samford University’s Brock School of Business. In addition, he is a Senior Research Fellow with the Institute for Faith, Work, and Economics, a Senior Fellow with the Beacon Center of Tennessee, and a Research Fellow with the Independent Institute. He is a member of the FEE Faculty Network. Visit his website.

Deirdre N. McCloskey
Deirdre N. McCloskey
Deirdre Nansen McCloskey taught at the University of Illinois at Chicago from 2000 to 2015 in economics, history, English, and communication. A well-known economist and historian and rhetorician, she has written 17 books and around 400 scholarly pieces on topics ranging from technical economics and statistical theory to transgender advocacy and the ethics of the bourgeois virtues. Her latest book, out in January 2016 from the University of Chicago Press—Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World—argues for an “ideational” explanation for the Great Enrichment 1800 to the present. 

quarta-feira, 16 de maio de 2018

A obsessao brasileira com o desenvolvimento - Paulo Roberto de Almeida

Um antigo projeto de trabalho, conduzido de forma dispersa, errática,  em diversos textos meus ao longo dos últimos anos, mas jamais de maneira sistemática, como ele mereceria.
Talvez cabe retomar o projeto agora.
Paulo Roberto de Almeida

A noção de desenvolvimento no discurso diplomático brasileiro

Paulo Roberto de Almeida

Parte I:
Desenvolvimento: biografia de um conceito
1. A economia natural e a economia dos clássicos
            (ausência da noção e da prática na economia do laissez-faire)
2. A emergência do desenvolvimento enquanto idéia
            (a noção iluminista de progresso; livro: The Idea of Progress)
3. O desenvolvimento se materializa na prática: o Estado como ator
            (Primeira Guerra e conseqüências práticas)
4. O triunfo do desenvolvimento: a idéia central de nossa época
            (sua consagração na retórica onusiana e na teoria econômica)
5. A tragédia do desenvolvimento: meio século de frustrações
            (a despeito de todo esse talking e dos estudos, a realidade...)

Parte II:
O desenvolvimento no discurso diplomático brasileiro
6. O desenvolvimento como idéia e como retórica
            (Furtado e outros desenvolvimentistas e seus reflexos no Itamaraty)
7. O discurso diplomático: recorrências e reverências
            (rendemos tributo, praticamente de modo mecânico, ONU, etc.)
8. Trajetória prática e arranjos mecânicos: a dinâmica dos grupos
            (a organização dos trabalhos nos foros desenvolvimentistas)
9. A eficiência marginal de um conceito: os rendimentos decrescentes
            (como tudo isso foi perdendo a força, mas continuamos insistindo)
10. O renascimento do desenvolvimento [enquanto discurso]
            (o papel apresentado na OMPI é um bom test in case...)

Parte III:
Conseqüências econômicas de um conceito
11. Brasil: país subdesenvolvido ou pais injusto?
            (o que somos afinal?: provavelmente ambas as coisas)
12. Do discurso à prática: correlações causais?
            (a retórica provocou mudanças reais?)
13. O fim do desenvolvimento?
            (conclusões pouco conclusivas?)

Biblio, etc

Brasília, 1ª versão: 5 outubro 2004

domingo, 17 de setembro de 2017

O stalinismo mental dos nossos desenvolvimentistas - Samuel Pessoa e Paulo Roberto de Almeida

Um dos grandes crimes ideológicos do século XX foi -- além do stalinismo industrial, ou seja, o culto da indústria pesada, que contaminou não só a URSS de Stalin, mas o Brasil da era Vargas e do regime militar, aliás até hoje, pois os companheiros foram perfeitos stalinistas industriais -- o "stalinismo mental", que aliás deriva do marxismo elementar de Marx, Engels, Lênin, Raul Prebisch, Celso Furtado e outros, o que faz com que esses mestres e epígonos queiram ver na industrialização concentrada, planejada, centralizada, controlada, regulada, o nec plus ultra do desenvolvimento econômico possível e necessário, ao contrário e a contra corrente da visão mais liberal, libertária, laissez-faire, de um Adam Smith, dos austríacos e outros, que preferem deixar indivíduos e sociedades totalmente livres para que cada um encontre as fontes de "sua" riqueza em qualquer oferta que queiram fazer para os consumidores existentes (sempre existem) em condições de mercados totalmente livres. 
Marx ainda tinha certa sofisticação, mas Lênin, apesar de um gênio político (para o mal, ou seja, para o poder absoluto), era um estúpido econômico, e quase destroi a economia da Rússia, que depois se transformou num escravismo contemporâneo sob Stalin.
Samuel Pessoa adota um enfoque mais light, ao criticar o desenvolvimentismo dos ingênuos, mas eu vou à raiz do problema, que é mesmo esse culto das máquinas e dos trabalhadores organizados associados ao coletivismo (socialismo, fascismo e outros fenômenos de intervencionismo estatal).

Paulo Roberto de Almeida 
Brasília, 17 de setembro de 2017

Continuamos a ter visão ufanista errada do desenvolvimento

Samuel Pessôa


Bananas correm risco de extinção

 Folha de S. Paulo, 17/09/2017



 República de bananas, para mim, sempre representou países com péssima institucionalidade. Dia sim e dia também, algum general -em geral de direita, mas às vezes de esquerda, com um bigodão, às vezes uma barba bem cultivada- tomava o poder em meio a um golpe militar.

A república de bananas se caracteriza pelas instituições frágeis.
Para boa parcela dos economistas brasileiros, o que caracteriza as repúblicas de bananas são as bananas, ou melhor, a exportação de matérias-primas.
Por esse critério, Chile, Canadá, Nova Zelândia e Austrália são repúblicas de banana.
Como em geral há relação entre desenvolvimento econômico e sofisticação tecnológica da pauta exportadora de um país -mas o que, como vimos, nem sempre é verdade-, muitos economistas brasileiros pensam que desenvolvimento econômico depende do que um país produz.
Não conhecem o trabalho espetacular do historiador Gavin Wright ("The Origins of American Industrial Success, 1879-1940", "The American Economic Review", 1990), que documentou que a pauta exportadora da economia americana até os anos 1920 era essencialmente de commodities. Ou seja, a economia americana era uma economia de bananas.
Ademais, inflam os números dos gastos do governo americano com a política de compras de produtos nacionais e com P&D. Se folheassem o "Cambridge Economic History of The United States", descobririam que a política industrial teve papel muito subsidiário no desenvolvimento americano.
Também verificariam que o grau de fechamento da economia americana da segunda metade do século 19 à segunda metade do século 20 foi elevado, mas não maior do que o grau de fechamento das economias latino-americanas, que, no Brasil, perdura até hoje.
Mas é sempre melhor ficar apegado a preconceitos do passado, que passam por cima de fatos como o de que a taxa de analfabetismo na Nova Inglaterra em 1750 era equivalente à brasileira de 1950.
A história econômica mostra que não há diferença na trajetória de crescimento da economia americana em comparação aos casos canadense ou australiano.
O maior desenvolvimento da indústria nos EUA é essencialmente consequência da maior escala da economia. População grande gera mercado, que naturalmente estimula o desenvolvimento da indústria. É por esse motivo que a economia americana tem mais indústria do que a australiana.
Enquanto lutamos contra as bananas, jogamos R$ 400 bilhões no lixo de incentivos do BNDES, política que os estudos mostram contribuiu para elevar os lucros de algumas grandes empresas, mas não elevou o investimento, outros tantos com uma política desastrada de conteúdo nacional, que lembra a lei "do similar nacional" do nacional-desenvolvimentismo, e tantas outras oportunidades perdidas.
A lista é longa.
Olhando ao passado, só enxergamos a "perda dos termos de intercâmbio", "os lucros, juros e dividendos distribuídos pelas multinacionais", "a lógica do investimento das multinacionais que não obedece aos interesses nacionais", "os juros da dívida externa" e "os juros pagos ao rentismo".
Liderados seja pela esquerda, seja pelos militares, continuamos a ter uma visão ufanista equivocada do desenvolvimento econômico.
O desperdício sem fim produzido pela ideologia conspiratória do nacional-desenvolvimentismo segue firme: desaguou na crise dos anos 1980 e na crise atual.
Enquanto isso, nossas crianças continuam a não saber ler e escrever.

sexta-feira, 18 de agosto de 2017

O "milagre" de Hong-Kong e o seu autor - livro biografia sobre John Cowperthwaite

Na verdade, não tem nenhum milagre. Apenas Adam Smith aplicado na prática, e constantemente.
Muito tempos antes que o World Economic Forum ou o Insead, ou a Heritage Foundation e o Fraser Institute, começassem a fazer os seus rankings e classificações de liberdade econômica, de competitividade, de bom ambiente para negócios, Milton Friedman já tinha detectado o sucesso que era e estava se tornando Hong Kong, um monte de pedras, algumas ilhas, que não tinham absolutamente nada em cima, a não ser uma boa localização no sul da China, perto do enclave português, bem mais antigo, que era Macau.
Pois bem: depois que a colônia inglesa (que tinha sido atribuída à Grã Bretanha por cem anos, de acordo com os tratados desiguais do século XIX) foi libertada da dominação japonesa ao final da Segunda Guerra -- um dos que ficaram presos ali foi o militar Charles Boxer, futuro historiador do império marítimo português -- sua renda per capita era menos da metade da renda per capita da metrópole. Bem antes da colônia ser devolvida à China, a renda já tinha ultrapassado a da metrópole, e atualmente é mais de 30% superior, e isso a despeito, desde os anos 1950 (pós-revolução comunista no continente), de um afluxo constante de refugiados e emigrados de várias partes da Ásia, buscando simplesmente liberdade para empreender, pessoas miseráveis, chegando sem qualquer pertence, muitas delas dormindo em cortiços na cidade (que ainda existem) ou em sampans no rio ou na sua embocadura. São essas pessoas miseráveis que criaram a riqueza de Hong Kong, como aliás dizia Adam Smith, seguida pelo administrador inglês da colônia, o homem que criou a sua prosperidade, e que é objeto desta biografia resenhada nesta matéria.
O que dizia Adam Smith, além da sua famosa frase sobre a "mão invisível", que muitos equivocadamente elevam à condição de teoria, quando é uma simpes imagem. Adam Smith disse o seguinte:

Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.

E não venham me dizer que esses princípios só se aplicam em situações especiais, em países pequenos, em cidades-Estado, como Cingapura e Hong-Kong, justamente.
Não: princípios de governo se aplicam em quaisquer circunstâncias, qualquer que seja o tamanho do país, por mais pobre que ele seja. O Brasil podia aprender com isso.
Elementar, não é?

Paulo Roberto de Almeida​
Brasília, 18 de agosto de 2017


The man behind the Hong Kong miracle



I have just finished reading Neil Monnery’s new book, Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong. This fascinating account of the rise of Hong Kong as a global economic powerhouse is well written and, as such, easy to read and understand. I’m happy to recommend it wholeheartedly to CapX’s discerning readership.
I first became interested in the story of Hong Kong in the late 1990s. The emotional handover of the colony from the United Kingdom to China, for example, is deeply impressed on my memory. But also, as part of my doctoral research at the University of St Andrews, I read a number of essays about the rise of Hong Kong written by the Nobel Prize-winning economist Milton Friedman. Friedman, an advocate of the free market and small government, believed that individuals, when left unmolested, will strive to improve their lives and those of their families. Prosperity will follow.
His was similar to Adam Smith’s insight:
“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”
No country in modern history has come as close to Smith’s ideal as Hong Kong. The territory that the British Foreign Secretary Viscount Palmerston described as “a barren island with hardly a house upon it” was once very poor. In the immediate aftermath of World War II and Japanese occupation, its per capita income was about a third of that in the United Kingdom.
By the time British colonial rule ended, Hong Kong was 10 per cent richer than the mother country. Last year, the former colony was 37 per cent richer than the UK. It is, therefore, apposite that the man credited with Hong Kong’s success should be a Scottish civil servant, a University of St Andrews alumnus, and a devotee of Adam Smith: Sir John Cowperthwaite.
As Monnery explains, Cowperthwaite was not the first small government advocate to oversee the colony’s economy and finances. A succession of colonial governors and their financial secretaries ran a shoe string government. But, they did so out of financial necessity, rather than deep ideological commitment to small government.
As Financial Secretaries, Geoffrey Fellows (1945-1951) and Arthur Clarke (1951-1961) established a regime of low taxes and budgetary surpluses, and free flow of good and capital. To those foundations, Cowperthwaite (1961-1971) added not only the vigour of his convictions, but also a handpicked successor, Philip Haddon-Cave (1971-1981). By the time Haddon-Cave departed, the success of Hong Kong’s experiment with small government was undeniable not only to the British, but also to the Chinese. Margaret Thatcher embarked on her journey to dismantle British socialism in 1979, while Deng Xiaoping started undoing the damage caused by Chinese communism in 1978.


And that brings me to the most important reason why Cowperthwaite, rather than Fellows and Clarke, deserve to be credited with the rise of Hong Kong. Basically, he was the right man at the right place in the right time – the 1960s. It was all well and good to run a small government when the colony was still poor. By the 1960s, however, the colony was prospering and demands for higher government spending (as a proportion of GDP) were increasing. As an aside, the government’s nominal spending increased each year in tandem with economic growth. To make matters much worse, socialism, be it in its Soviet form (i.e., central planning) or in its more benign British form (state ownership of the commanding heights of the economy) was ascendant.
In fact, just before departing from Hong Kong, Clarke appears to have had a sudden crisis of confidence in the colony’s economic model, noting:
“We have, I think, come to a turning point in our financial history … There seem to be two courses we can follow. We can carry on as we are doing … Or we can do something to plan our economy … Which course should we adopt?”
Mercifully, Cowperthwaite was able to articulate the reasons for staying the course. In his early budget debates, he noted:
“I now come to the more general and far-reaching suggestion made by Mr Barton and Mr Knowles, that is, the need to plan our economic future and in particular, the desirability of a five-year plan. I would like to say a few words about some of the principles involved in the question of planning the overall economic development of the colony.
“I must, I am afraid, begin by expressing my deep-seated dislike and distrust of anything of this sort in Hong Kong. Official opposition to overall economic planning and planning controls has been characterised in a recent editorial as ‘Papa knows best.’ But it is precisely because Papa does not know best that I believe that Government should not presume to tell any businessman or industrialist what he should or should not do, far less what he may or may not do; and no matter how it may be dressed up that is what planning is.”
And:
“An economy can be planned, I will not say how effectively, when there unused resources and a finite, captive, domestic market, that is, when there is a possibility of control of both production and consumption, of both supply and demand. These are not our circumstances; control of these factors lies outside our borders. For us a multiplicity of individual decisions by businessmen and industrialists will still, I am convinced, produce a better and wiser result than a single decision by a Government or by a board with its inevitably limited knowledge of the myriad factors involved, and its inflexibility.


“Over a wide field of our economy it is still the better course to rely on the nineteenth century’s ‘hidden hand’ than to thrust clumsy bureaucratic fingers into its sensitive mechanism. In particular, we cannot afford to damage its mainspring, freedom of competitive enterprise.”
It is not clear whether Cowperthwaite ever read Friedrich Hayek’s 1945 essay, “The Use of Knowledge in Society”, which posits that allocation “of scarce resources requires knowledge dispersed among many people, with no individual or group of experts capable of acquiring it all”, or whether he came to the same conclusions as the Austrian Nobel Prize-winning economist on his own. But, even if he were consciously or sub-consciously influenced by Hayek, it speaks much of Cowperthwaite “the thinker” that he took Hayek’s insights to heart, unlike so many decision-makers around the world, who succumbed to the Siren calls of socialism.
And so it was with considerable amazement that, towards the end of my first year at St Andrews, I discovered Cowperthwaite and I were neighbours. His house on 25 South Street was a few hundred feet away from Deans Court, the University’s post-graduate student residence. I immediately wrote to him and he responded, asking me to come for tea. I spent a wonderful afternoon in his presence and kept in touch with him during my remaining time at St Andrews.
Last time I saw him, he came to the launch of the libertarian student magazine Catallaxy, which my friend, Alex Singleton, and I wrote together. As he took his leave, I saw him walk down Market Street and got a distinct feeling that it would be for the last time. Shortly after I graduated and moved to Washington. A new life and new job took precedence and St Andrews slowly receded down memory lane.
Neil Monnery’s book made those wonderful memories come alive again. His work has immortalised a man to whom so many owe so much. Architect of Prosperity is an economic and intellectual history. Above all, it is a tribute to a principled, self-effacing, consequential and deeply moral man. Monnery deserves our gratitude for writing it.
Marian Tupy is Editor of HumanProgress.org and a senior policy analyst at the Center for Global Liberty and Prosperity

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