Perhaps the most successful government financial operative in history has died:
John James Cowperthwaite was born on April 25 1915 and educated at Merchiston Castle School in Edinburgh. He went on to study Economics at St Andrews University and Christ's College, Cambridge, before joining the Colonial Administrative service in Hong Kong in 1941. During the Japanese occupation he was seconded to Sierra Leone.
Returning to Hong Kong in 1945, he was asked to find ways in which the government could boost post-war economic revival; but he found the economy recovering swiftly without intervention, and took the lesson to heart.
The lesson being, if it isn't broken don't attempt to fix it:
Cowperthwaite himself called his approach "positive non-intervention". Personal taxes were kept at a maximum of 15 per cent; government borrowing was wholly unacceptable; there were no tariffs or subsidies. Red tape was so reduced that a new company could be registered with a one-page form.
Cowperthwaite believed that government should concern itself with only minimal intervention on behalf of the most needy, and should not interfere in business. In his first budget speech he said: "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 centralised decisions of a government, and certainly the harm is likely to be counteracted faster."
From 1961 to 1971 Cowperthwaite exercised almost complete control of the colony's finances under successive governors, Sir Robert Black and Sir David Trench, who were sympathetic to his philosophy and content to give him his head. Among his peers in the Hong Kong government, it was said that only Claude Burgess, the colonial secretary, could keep him in line. "His brilliance and argumentation prevailed, and he thus made policy by ruling on all items of expenditure," said one colleague. But Cowperthwaite summed up his part in the colony's success over the decade with some modesty: "I did very little. All I did was to try to prevent some of the things that might undo it."
The measure of that success was a 50 per cent rise in real wages, and a two-thirds fall in the number of households in acute poverty. Exports rose by 14 per cent a year, as Hong Kong evolved from a trading post to a major regional hub and manufacturing base.
Wednesday, January 25, 2006
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