Lion Rock 23, Our “Should” “Must” Society

I am reposting this beautiful article by a friend and Chairman of the Lion Rock Institute in Hong Kong, Nick Smith. Too many "bright" boys and girls these days and they think their "bright ideas" should be legislated and enforced/imposed on everyone else in society. Enjoy.
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Our “Should” “Must” Society 

Nick Sallnow-Smith  2018-01-31

Open any op-ed page of most newspapers (at least the English language ones that I read) and you enter the world of “should” and “must”. Many, on some days most, of the opinions expressed are about what others should be doing, or must be compelled to do, to make Hong Kong/the world a “better” place.

Many of you in my age group may remember a world when the advice of our mothers tended to include well-worn phrases like “mind your own business”, “live and let live”, “don’t interfere” and similar pieces of ancient wisdom. Underpinning this view of society was the thought that you should look after your own affairs and not interfere with others in pursuit of theirs. This had the admirable result that one focussed on one’s own responsibilities, rather than spending energy trying to alter the activities of others. I think the benefit of that concern with one’s own life and accountabilities first has been lost at a great cost. Today, the focus is not on what you are going to do with your life but an obsession with why others are not helping you. I am not sure when this view of an individual’s role in society changed. But it seems to me that there may be a link between the public policy angle to this and the “social” aspect. Let me explain.

As expectations of the role of the state have changed, so has the focus of discussion in newspapers’ pages shifted. Politics in the West was largely a class-based debate in the postwar period; rights in the workplace etc. The idea that the state could have a role to play in all walks of life, including what happens within a family was not thought of. But as the interventions of the state have grown, then the need for ordinary citizens to take an interest in, and push for, policy changes has also grown. Because public policy will affect your daily life, the need to be heard grows. Op-ed writers accordingly appeal to you to support their pet way of changing the world. And you may take an interest, because if the state responds and enacts laws, then indeed your pet project may be forced on everyone. If you don’t take a position, then perhaps someone else’s pet project will be imposed upon you. What is, for many, a natural aspiration to want society engineered into a shape that they desire, leads politicians to propose such schemes for popular support.

The process becomes self feeding. The more states seek to enact legislation to intervene in more and more areas of previously private conduct, the more important it is to push parties to adopt your pet scheme. That “activism” then motivates and empowers the State to increase the intervention yet further.

As I indicated, this had gone far beyond the push to protect employees in the workplace. Today, well meaning folk will write urging parents to stop their children from using smartphones, urging laws against sugary drinks, and so on. Already in the West the range of behaviours in the home for which children can legally be taken into care is quite astonishing. Gradually as the spiral of ever more policy intervention gathers pace, what for all of human history has been the responsibility of parents is now being assumed by the State particularly in Europe.

The extent to which this assumption, that there must be intervention in every aspect of society, was borne out for me when reading an op-ed article last week on school curricula. Written from the perspective of desiring more “diversity” of thinking amongst the younger generation, the writer actually uses the phrase “schools must teach respect for different views”. There is no way, in that authors’ view, to have respect for diverse opinion unless we force schools to teach it. And of course there must be a common platform of curricula content and means of analysis. The writer seems not to see the irony in compulsory education on freedom of thought.

So much for the public policy aspect of this. What about the social sphere? My belief is that the “social justice warrior” world that Western societies have now entered is in effect an extension of this public policy dynamic into all of social life. Look at discrimination as an example, there are inevitably limits to the effective enforcement of anti-discrimination laws by the state, as these have grown since the 1960s. Those “should” “must” citizens, to which I alluded at the beginning of this piece therefore move into the social sphere. Enforcement can now move on from the state, to impose social penalties: ostracism, shaming, career destruction. Many have been claiming that this is somehow caused by social media. I disagree. It is of course enabled by social media but the cause is much deeper. If politics is conducted in a way that if your group can command enough support, it can enable you to enforce your mores on the whole community, this encourages behaviour in the social sphere towards imposition of your view. The effect is more frightening however. In politics, there are some institutional constraints on the speed with which this happens and on the levels of madness it assumes. In the social context, no such restraints exist.

In the West today, it is no longer enough to obey the law and “mind your own business” (and it is hard enough to know all the laws you are required to obey). Now you need to adhere to an ever changing morass of “social” codes of behaviour the breaching of which may lay you open to social exclusion. Even more concerning for freedom of thought and behaviour, is that these codes are applied retrospectively. Even the law is seldom does that. But today you can be found to have transgressed a new social code of behaviour 30 years ago and have your social standing destroyed. You should have known that, 30 years later, it would have become “politically incorrect”.

Now you might be thinking that this is only a problem in the West. The East is of a different culture and could never see such a transformation. I am not so sure. The media flows that influence so much of the thinking of new generations are now global, not local as they were 50 years ago. A slide into a world where your peers try to impose what you “should” and “must” do in every aspect of your daily lives, may not be too far ahead.

There is a thought for a Happy New Year!

Nick Sallnow-Smith

Chairman

The Lion Rock Institute

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See also: 
Lion Rock 20, Hong Kong's labor welfarism and rising unemployment, July 08, 2016 
Lion Rock 21, Dangers of Universal basic income (UBI) philosophy, August 11, 2017 
Lion Rock 22, Hong Kong's early policies on free trade, zero income tax, October 24, 2017

Lion Rock 22, Hong Kong's early policies on free trade, zero income tax

I like this article by a friend since 2004, Andrew Pak Man Shuen, Director and Co-Founder of the Lion Rock Institute in Hong Kong. I thought it was Sir John Cowperthwaite who was the first engineer of HK free trade policy. Reposting, did not include the first four paragraphs. Photo I got from wiki.
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How Hong Kong’s Bond Villain Keep Invasion at Bay

13/09/2017

THE CONSERVATIVE | June 2017 | Issue 4 | Andrew Pak Man Shuen

… Sir Henry Pottinger was our first colonial governor. After the Opium War, he turned Hong Kong into an outpost of the British Empire so distant that Victorian parents would threaten to send unruly children there as a punishment.

He laid out the three basic governing tenets of Hong Kong. The first was that there must be no direct taxes: government revenue would come from land leases, licensing fees etc. The second was to “respect local customs”. Finally, Hong Kong would allow free trade, including with the enemies of the British Empire.

From the perspective of the 21st century, it is easy to conclude that Potting must have been a liberal. No direct taxes. Multiculturalism. Free trade. And all for a city built on commerce.

But, before celebrating, we must bear in mind that Pottinger was a hard-nosed colonialist. He and his colleagues had no qualms about butchering the “yellow peril” as they barrelled into Qing-dynasty China.

So why those three seemingly enlightened tenets? Remember that this was before the telegraph and the Suez Canal. Britain was not all that keen to hold a colony that was not only far away but surrounded by hostile powers. London sent the message to Potting that he would not be receiving much in the way of manpower or budget.

Hence it was out of realpolitik that Potting embraced those principles. First, the collection of direct taxes is extremely labour-intensive; without them, he could manage with a much smaller civil service. Second, although the Chinese of that era engaged in polygamy, female pedal mutilation and (perhaps most objectionable to the British) eating dogs, Pottinger knew that he was in no position to engage in mass behaviour-modification. If everything the Chinese were doing was allowed to stay legal, the police force could remain small and still be effective in the protection of property rights.

The decision to make Hong Kong a true free port where even the enemies of the British Empire could trade was a master-stroke. Pottinger understood that the colony would be hard to defend with military force.

To sail from Plymouth, the home port of the South China Sea fleet, round the Cape of Good Hope, across the Indian Ocean, through the Malacca Straits and then up the South China Sea was a logistical nightmare even in peacetime.

However, Pottinger also knew that, as Hong Kong possessed no natural resources to be pillaged, together with the fact that attacking any part of the British Empire would incur a cost for the invader, any assault must be part of a grander strategy for an invader in search of a prize other than this colonial outpost. If the would-be invader discovered that they could purchase whatever they coveted from Hong Kong, it was not worth the effort.

This explains what happened during the Korean War. The British colonial administration must have known about the smuggling activities of Henry Fok, who was transporting massive resources to Communist China. The latter had been placed by the United Nations under a total trade embargo. This meant that free-trade colony under British control was a lifeline for Mao, and far more useful than a Chinese-ruled Hong Kong.

As a result, Hong Kong remained British until 1997 – that is, 50 years longer than India. Its sovereignty was preserved because the power most likely to invade was protecting it. This makes Pottinger look like a geopolitical genius.

Of course, Hong Kong’s sovereignty did change hands once before 1997. In 1941, Japan invaded as it simultaneously rained bombs on Pearl Harbour, and we surrendered in three weeks. If Pottinger’s adoption of free trade was such a master-stroke, how come Hong Kong fell to the Imperial Japanese?

Next to the Yasukuni Shrine in Tokyo, which commemorates the war dead, there is a museum that is basically an attempt by the Japanese to explain what they did. One word is crucial: oil.

According to Pottinger’s theory, if the Japanese could have bought oil through Hong Kong, the Pacific War with the Allied forces might have been averted. Of course, this also means that Hitler would have never declared war on America. And that was not what Churchill wanted. That raises the question of why Hong Kong uncharacteristically participated in the oil embargo and suffered invasion – but we can leave that discussion for another day.

To conclude, the logic of “when goods don’t cross borders, soldiers will” that underpinned the Treaty of Rome was on full display in Hong Kong. Peace and sovereignty flow from the fountain of authentic free trade, even in the absence of soldiers and Ian Fleming’s secret agents. And, of course, there is another consequence of authentic free trade, which is massive and widely shared prosperity. That is also on full display in Hong Kong.

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See also: 
Lion Rock 19, Not enough capitalism in Hong Kong, May 12, 2016 
Lion Rock 20, Hong Kong's labor welfarism and rising unemployment, July 08, 2016 
Lion Rock 21, Dangers of Universal basic income (UBI) philosophy, August 11, 2017 
Hong Kong and John Cowperthwaite, Part 2, October 09, 2017

Lion Rock 21, Dangers of Universal basic income (UBI) philosophy

The philosophy of universal basic income (UBI) is floated and discussed in many countries now including the Philippines. The philosophy is lousy because even the lazy or irrelevant-thinking people will have guaranteed universal income.

I am reposting a good article by a friend, Nick Sallnow-Smith, Chairman of The Lion Rock Institute (LRI) in Hong Kong. This was published in the LRI Newsletter, June 2017.

What are you worth?

Nick Sallnow-Smith

It is often suggested by those skeptical about the value of free markets, that to contribute to the community you need to be active in the world of charities, NGOs, or what is called “public service”. By implication, to work in the business sector is an indication of selfishness and greed. You are only out for yourself is the implied slur. This approach finds the idea of Universal Basic Income (UBI) very attractive because it is claimed it enables the detachment of the income you receive from the work you do. The promoters of this idea seem to find it self evident that this a “good thing” because people will be spared the drudgery of work and can instead follow their dreams to be creative, or make other life choices unconstrained by the need to earn income. Let’s examine if either of the elements of this argument make sense: that working in business is selfish, and that detaching income from what you do with your life is inherently desirable.

The growth in our standard of living since most human beings were engaged in subsistence farming is largely due to the division of labour; to specialisation in activities in which you are relatively more able than others. For this specialisation to be facilitated, we need a means to exchange our skills with the products and services produced by others. This means is money (whether gold, fiat money, shells and any other accepted exchange medium). Money does more than enable us to exchange with others, it provides a measuring device by which we can assess the cost of products and services against their relative value to us. But more than that, the market enables us to assess the relative value to others of the skills we have.

When I choose whether to be an artist or a banker or a tour guide, I know my own preferences for what I’d like to spend my time doing. The income I am offered by potential customers of my art, banking skills or tour guide work tells me the relative assessment by others of my prowess in these areas. I may still choose to be an artist, and settle for a low income if I love it enough, but market pricing tells me that the community would prefer me to stick to being a tour guide and not bother with my rather poor oil painting. By pricing my skills in a free market, my value to the community – what I am worth – is laid bare.

By contrast, if I work in a charity, NGO, or the public sector generally, there is no test of the value of what I do; certainly not one that enables relative value to be assessed. I might be a rather poor schoolmaster (actually in 1974 I was!) but since the students’ parents did not pay my wages, had no way to dispense with my services, and had no input into the process by which their children were taught, I had no information about whether what I did was valued at the level of my income, nor whether I would be contributing more to society as a barman.

Which is more selfish then? To offer your services in a competitive labour market and see how the community truly values what you do; or to take a position in those sectors which never submit you to a market test.

It is concerning to me that those who work in “public service” frequently imply that theirs is a more noble calling than the down and dirty private sector, where everyone is in it “only for the money”. In fact, the opposite is the case. Only if you subject yourself to the market test can you ever know whether the community of which you are a part, values what you do.

Let me turn now to the UBI idea, which is currently such a hot topic in policy debates about how to respond the feared loss of jobs resulting from AI. If what you do is detached from the income you receive, you sever completely any possibility of knowing whether what you do is of any value to the community. Indeed the policy proponents are claiming this severance is a benefit, that what we do should have no relationship to what others value in us. We should all be supported by the state so that we can do whatever we like, without regard to its value to society. This seems to me to be a policy of institutionalising the disregard of our value to the community. In answer to the question in my title, it does not matter what you are worth, say the proponents of UBI, it need never be measured. Many who disapprove of free market libertarianism claim it “atomises” the community, rendering us all completely separate uncaring individuals, alone in the social universe. Yet the opposite is the truth. Selling your skills in the market means you are taking account of what others value in what you do, while UBI is the truly “atomising” policy.

There is one last aspect of this which I believe to be of even more importance; the “self-worth” that any of us feels every day as a result of what we do. If others have valued what you do (apart from your own satisfaction in a job well done), you feel good. This is deeply important for the way communities are bound together. Not only have you found a way of selling your skills that gives you an income but you have done so in a way that is evidently valued by others. The baker whose cakes are wildly popular is not only happy to be paid for his efforts, his can and does take pride in being valued by his customers. If the future consists of millions of people detached from the feeling that what they did that day was valued, I fear there will be a serious deterioration in self worth and self reliance; the stuff of many apocalyptic sci-fi movies.

Of course proponents of UBI will argue that it will meet only “basic” requirements (let’s see how the demands for it to be increased are resisted before we are confident about  that). But the drive to find the best use of your skills for the community at large will still have been significantly eroded. You will be paid to be useless, not useful. It is suggested by common sense as well as economic theory that if you subsidise something you will get more of it. Communities should be very careful before they embark on large scale subsidisation of uselessness.

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See also: Lion Rock 18, Nick Smith as new Chairman of LRI, April 05, 2016 
Lion Rock 19, Not enough capitalism in Hong Kong, May 12, 2016 
Lion Rock 20, Hong Kong's labor welfarism and rising unemployment, July 08, 2016

Lion Rock 18, Nick Smith as new Chairman of LRI

The Lion Rock Institute (LRI), Hong Kong's first and only independent free market think tank, has a new Chairman, Mr. Nick Sallnow-Smith. For 10 years, 2004-2014, LRI Chairman was Bill Stacey. Then in 2015, he changed job I think and he needed more time there, so LRI Exec. Dir. Peter Wong acted as interim Chairman in 2015 until March 2016.

Below is Nick's letter as posted in the LRI website.
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1 April 2016

A Message From Our New Chairman

Dear Lionrockers,

Despite the date, this is not an April fool’s message! Rather it is my means of expressing my pleasure today in saying a formal hello to all involved in the Institute.  I had the honour (with a ‘u’  for all you North Americans!)  of being asked, in our own “small circle” election, to take over today from Peter Wong as the Chairman of LRI.

It is a role I am happy to take up. The “Lion Rock spirit” in Hong Kong has been one of the key factors attracting me to stay in this city for the rest of my life. But it is a spirit which is at risk of damaging erosion.  For all of its modern history, our city has been an international role model for free enterprise and open markets. Hong Kong’s success has demonstrated to the world the value that these freedoms create for the whole community. That they could be questioned here of all places is astonishing, and is a challenge which we should not shirk.

We have a duty to speak up for the spirit of individual freedom and accountability that the Lion rock represents, so that new generations of Hong Kongers understand what made this city such a success, and realise that its loss could irreparably damage it.

For over 150 years politics were effectively “outsourced” to London. Free markets here were an economic issue. Today, they are also critical for personal freedom. The two cannot be separated. Without freedom to exchange, there can be no genuine personal freedom, and without the personal freedom to benefit from it, free trade means nothing.

I look forward to joining you in our own “free enterprise” collaboration at LRI aimed at standing up for these freedoms and explaining their fundamental value. This stand is increasingly important, as we face a growing global wave of collectivist fervour, which urges the denial of individual freedoms because they prevent those who would “socially engineer” our lives from doing so.

I hope to meet more of you over the coming months to share ideas on how we can be more effective in this mission.

Best wishes,

Nick Sallnow-Smith

Chairman

The Lion Rock Institute

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I have met Nick 3x in HK, during the LRI's Reading Club Salon 2012, 2013 and 2014. I attended those 3 events of small-group reading-discussion sessions, courtesy of LRI travel scholarship, along with Barun Mitra, Feng Xingyuan and Mao Shoulong. Our group photos on those 3 events in 2012, 2013 and 2014, respectively.

In the last photo, Nick is 2nd from left standing, Peter Wong is 4th from right standing, and Bill is in the center, seated.

Nick is British, been living and doing business in HK for decades. Soft-spoken guy, I can't imagine how he gets angry because he seems to be smiling often.

Congrats LRI for having Nick on the board.
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See also: 
Lion Rock 4: Leftism and Populism by Intellectuals, November 05, 2012 
Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013
Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014
Lion Rock 16: 10th Anniversary of LRI, November 07, 2014 
Lion Rock 17: Photos and Discussions in Reading Club Salon 2014, November 25, 2014

EFN Asia 56, Conference 2014 in Hong Kong, part 1

The following are minutes and proceedings during the Economic Freedom Network (EFN) Asia Conference 2014, Hong Kong, on the theme, “Liberalism: Promoting Growth, Reducing Inequality”, November 2014. Major sponsors were the Friedrich Naumann Foundation for Freedom (FNF), a liberal political foundation based in Germany, and the Lion Rock Institute (LRI), a free market think tank in Hong  Kong.

These notes were made by Karthik Chandra of the Foundation for Democratic Reforms, INDIA. The 25-pages notes are posted in

http://efnasia.org/wp-content/uploads/2015/10/EFN-Asia-2014-Conference-Report.pdf

I am reposting them by major segments and  installments, plus my brief personal notes on each segment. Here’s the 1^st installment.

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Day 1: November 6, 2014

Introduction to the EFN 2014 Conference by MC, Wan Saiful Wan Jan

Chief Executive, Institute for Democracy and Economic Affairs (IDEAS), Malaysia

Welcoming Remarks

Bill Stacey, Chairman, LRI

• Welcome to Hong Kong! Given the recent developments (citizens’ demands and mobilization) in Hong Kong (HK) serving as the backdrop, this certainly is a good and clearly an interesting time for all the participants to assemble in Hong Kong, especially to discuss about inequality, liberty and freedom.

• There is an image of HK in some quarters of the media that capitalism here is of the crony variety and that there is no true economic freedom or liberty for its citizens. But the reality is that for a city of 7 million population, there is a lot of economic freedom and enterprise.

• At the heart of the current political developments seems to be a vigorous debate about two freedoms – economic and political. But, there is no conflict between the two. Those institutions that ensure economic freedoms in the form of greater equality, growth, prosperity and overall economic freedom also underpin the political freedoms. A few such institutions are free flow of information and rule of law.

• ‘Liberalism’ as understood in the traditional sense should not be viewed as an end in itself. There is a difference between treating people equally and keeping/ensuring that they remain equal.

Siegfried Herzog

Regional Director, FNF, Southeast and East Asia

• Welcome to Hong Kong EFN Conference. EFN Asia Conference has become a long established tradition, this event being the sixteenth one; this is my first one as a Regional Director. Thanks to the LRI and the Frasier Institute for being our partners. LRI is also celebrating its 10th anniversary; congratulations to them.

• Events such as the EFN 2014 greatly help institutionalize the ideas, research, debates and international experiences help them become a part of the political and academic discourse on economic freedoms.

• This event is being held in the background of the furious debate over political and economic freedoms of HK vis-a-vis China. HK has long served as the global leader of economic freedom. Now, the debate is about its political freedoms; about ensuring the rule of law and independence from political interference in HK.

• Currently, there is also a great debate on economic inequality. The idea of ‘economic equality’ retains a lot of appeal despite the fact that communism and socialism have repeatedly failed to ensure the same, based on our experiences in several countries.

• At the same time, this debate also touches upon the issue of social mobility and how crony capitalists and well-connected gamers have managed to subvert economic institutions and thereby gain undue benefits.

• This conference therefore is a valuable contribution towards helping settle the above debate because it provides a platform for sharing of knowledge and bringing new ideas into an area that has been traditionally dominated by left-leaning thinkers or misguided activists.

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Me: Right, the (classical) liberal definition of equality is equality before the law, equal  application of the law to unequal people, equality in access to opportunities with no exception or people giving exemptions. And inequality of outcome, of income and assets ownership, is the natural result because people have different attitudes in life. 

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See also:
EFN Asia 43: Day 1 of Conference 2014, November 06, 2014
EFN Asia 53, Successful Conference 2015 has ended, November 25, 2015 
EFN Asia 54, On Hong Kong and China, free trade and CEPA, January 27, 2016 
EFN Asia 55, Presentation by Tom Palmer in Bhutan 2015, February 03, 2016

EFN Asia 54, On Hong Kong and China, free trade and CEPA

I am reposting an interview by the Economic Freedom Network (EFN) Asia of Andrew Work (AW). Andrew is the Publisher and Editor-in-Chief of Harbour Times (HT), the flagship of New Work Media. Before creating the HT, he was the Exec. Director of The Canadian Chamber of Commerce in Hong Kong for a few years. And before that, he was a co-founder and founding Exec. Director of The Lion Rock Institute (LRI), Hong Kong’s first free market think tank, born in 2004.

Andrew holding a copy of the HT, thanks to Olaf K. for this photo. Andrew is a friend since 2004. Met him first time in Michigan for the Mackinac Leadership Conference, then at the Atlas Liberty Forum in Chicago, then in several meetings in Washington DC, then at the EFN Asia conference in Hong Kong, October 2004.

Here’s the interview. I omitted the first Q&A.

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EFN: World War II put an end to the opium trade. How did that affect Hong Kong?

AW: At that point Hong Kong had already established itself as an important Asian trade center and the people of Hong Kong, their jobs, incomes and prosperity very much depended on the flow of goods through the harbour. And this meant that Hong Kong’s DNA remained free of policies that, for example, aim to protect local industries from foreign competition through taxation. Hong Kong was always wide-open for trade, only few goods were subject to import duties. And in some cases abolishing such import duties has even proved beneficial.

EFN: For example?

AW: Well, a recent example would be the de facto elimination in 2008 of the import duty on wine. The duty was actually not abolished, but reduced from 60% to 0%. This has had a tremendous effect: Within only one year the total value of wine traded in Hong Kong doubled. Practically overnight the city became Asia’s trade and auction hub for fine wine. This has turned out to be immensely profitable and has led to the creation of new infrastructure – such as special warehouses – and jobs. In effect an entirely new industry sector has emerged within the blink of an eye.

EFN: In Europe we are witnessing a rather emotional debate about the Transatlantic Trade and Investment Partnership (TTIP). Here in Asia negotiations over the Trans-Pacific Partnership (TPP) were concluded last year. In how far are free trade agreements relevant to Hong Kong?

AW:  FTAs mainly deal, and I am simplifying a bit here, with the mutual dismantling of tariff and non-tariff trade barriers. There’s not much to dismantle in Hong Kong in that regard. But Hong Kong has negotiated a couple of FTAs during the past few years, for example the ones with EFTA and Chile, and the Closer Economic Partnership Agreement (CEPA) with China. While, on the face of it, signing CEPA didn’t make that much difference at first, its later iterations tackled some issues of importance to Hong Kong. One example would be the mutual recognition of academic titles and professional qualifications.

The reduction of barriers within the framework of CEPA could be beneficial – both for foreign professionals who want to settle in Hong Kong and for Hong Kongers who wish to offer services in mainland China.

Many restrictions remain on offering services in Hong Kong. The Medical Council of Hong Kong makes it very hard for foreign physicians to settle in Hong Kong and offer medical services. The same applies to foreign lawyers. In my view these are unnecessary restrictions that reduce consumer options.

As far as TPP is concerned, I am convinced that Hong Kong will profit immensely, even though it is not a part of the treaty. Hong Kong very much depends on world trade. If trade is flourishing, Hong Kong prospers.

EFN: What are the long-term prospects of Hong Kong?

AW: That very much depends on how Hong Kong will elect its Chief Executive (CE). Hong Kong’s constitution, the Basic Law, is in many regards a fantastic legal document. But unfortunately it vests the Chief Executive with a lot of power. Let me give you an example: Suppose you want to file a complaint against the police. You would then turn to the Independent Police Complaints Council. Its members are appointed by the Chief Executive. But he [the CE] also appoints the police chief and has the final say on nominations to the High Court. Furthermore, the Chief Executive appoints the head of Hong Kong’s anti-corruption commission. This goes to show that too many institutions depend on the CE, a person who in theory has two masters: The people of Hong Kong and Beijing. But ultimately all important decisions are made by Beijing.

EFN: So, in a manner of speaking, very much depends on whether China understands Hong Kong or not?

AW: Precisely; unfortunately right now it seems that the leadership in Beijing shows little understanding of Hong Kong. Beijing doesn’t appreciate that the more they meddle in Hong Kong’s affairs, the more opposition they will face. Some people might simply decide to pack their stuff and leave. And these are dire prospects. Hong Kong became rich because the city was always allowed to do what lay in its interest. Hong Kong experienced rapid economic growth and lifted millions out of poverty long before China started to catch up. But this is a view that is not shared on the mainland. In China, the perception prevails that Hong Kong owes its wealth to China alone. I have the feeling that, if in doubt, Beijing has more interest in exerting control over Hong Kong than seeing the city prosper. The thinking seems to be: If China isn’t perceived as being in full control of Hong Kong, other regions on the mainland might become restive as well.

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See also:
EFN Asia 50, New network member, Center for Indonesian Policy Studies, September 25, 2015 
EFN Asia 51, Draft program, Day 1 of Conference 2015, November 05, 2015 
EFN Asia 52, The 5 fishbowls of economic freedom in Asia, November 20, 2015 
EFN Asia 53, Successful Conference 2015 has ended, November 25, 2015

Lion Rock 17: Photos and Discussions in Reading Club Salon 2014

Here are some photos of the Lion Rock Institute (LRI) 3rd Reading Club Salon (RCS) 2014 held three weeks ago in Hong Kong. Below, our group photo after the morning session, moderated by LRI Chairman Bill Stacey (seated, center). The afternoon session was moderated by Ken Schooland (seated, 2nd from left) of the Hawaii Pacific University. LRI Executive Director, Peter Wong, is standing behind Bill.

Milovan Djilas' book, "The New Class" (1957) was our take off discussion in the morning session. Bill asked something like, "Is there something in Marxism and its class analysis that makes it so appealing to the public and intellectuals?"

Among those who answered Bill's question was Feng Xingyuan (CASS, Unirule, CIPA, in Beijing), standing behind me in the above photo. He reasoned that the term "class" (Marx's capitalist class and working class) is misleading because there are now many "in-between" sectors in society like small entrepreneurs who are also workers and managers of their own small companies, so who exploits whom? 

I agreed with Xingyuan and added that  Marx’s class is indeed misleading and not useful, but Djilas’ concept of a "political class" is useful. Not only in national and local governments political class but also those in the international, multilateral and bilateral bureaucratic class. Good example is the UN, its attached or partner organizations and institutions, in pushing alarmism and more government intervention in crafting climate and energy policies.

Nick Smith (The Link, HK) added that aside from Djilas' bureaucratic class, there is also the managerial class,  An expansion of "class".

Fred McMahon (Fraser Inst., Canada) noted that with global competition, political nepotism has drastically declined in dispensing power and privilege in many countries.

Xingyuan added his observation that the Chinese government's power has increased, there is "methodological individualism", a class of people within the government doing detrimental things. An expansion of the concept of "class" may be ok but “class struggle” is not appropriate. More of “interest struggle” within governments, within businesses.

Here are some points by Djilas in Chapter 3, "The New Class". It talks about huge inequality between the ordinary citizens and the political class, the huge privileges of the latter, a capitalism "disease" that a communist society is supposed to correct, not continue and even exacerbate. This did not happen of course.

And a portion of Chapter 4, "The Party State". Djilas made a quick survey of Marx, Lenin and Stalin, their differences in personality, in one paragraph. Then  the expansion of the communist state under Stalin.

Djilas' book should be read or browsed by current socialists and bleeding heart activists, government and foreign aid bureaucrats and consultants. Their new mantra of "alarming social inequality" points to only one thing -- even bigger governments (local and national) and multilateral institutions (UN, WB, ADB, IMF, etc.) whose main goal is to further redistribute by force and coercion, the wealth and assets of the more hard-working, more efficient, more ambitious sectors of the planet.

This is a different "class" of people. They enjoy the products and innovation of capitalism and individual excellence, then turn around and demonize the free enterprise system, and call for more regulations on top of existing multiple and rigid regulations.

Sincere and non-envious scholars and researchers should not demonize capitalism  and high inequality. Rather, they should demonize policies that prevent the poor from taking advantage of the momentum of innovation and competition. Or create a culture of entitlement, dependency and mendicancy among the poor.

Thanks again to LRI for another stimulating, small group discussions.
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See also 

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014
Lion Rock 16: 10th Anniversary of LRI, November 07, 2014

Lion Rock 16: 10th Anniversary of LRI

The Lion Rock Institute (LRI) held a great dinner gala last night here at Harbour Grand Hong Kong to celebrate its 10th anniversary. It was a fantastic event -- celebration of its 10 years existence, fellowship with LRI's major sponsors and donors, a fund-raising activity through the "Silent Auction", and networking with EFN 2014 conference participants. All in one night.

Below, the key personalities from left to right: Fred McMahon of Fraser Institute (Canada) who presented the result of the Economic Freedom of the World (EFW) 2014 Report; John Tsang, HK's Finance Secretary who gave the Keynote Address; Bill Stacey, Chairman of LRI; Siggi Herzog, FNF Regional Director for East and Southeast Asia; and Andrew Work, LRI co-founder and MC for the night.

VIP table below, from left: Nick Salnow-Smith of LINK publications, and has been a friend for three years now, we participated in the LRI's Reading Club Salon 2012, 2013 and 2014. He looks like Tony Blair but unlike Mr. Blair, Nick is soft spoken and very liberal/libertarian. Beside Nick is the head of CLP, a big energy company in HK (power generation, distribution, Kowloon area), Bill, John and Siggi.

Fred presented the EFW 2014 Report where HK, for the nth time, remains in #1 spot, followed by Singapore #2 and New Zealand #3. With regards to the on-going protests in HK, Fred showed a chart where HK's economic freedom score is very high compared to its rule of law score. Nonetheless, HK's rule of law score is higher compared to world average, and much higher compared to China's rule of law score.

Andrew Work mentioned during the program that LRI was started by "three crazy guys", Andrew Pak Man Shuen (left), Simon Lee (middle) and himself, in early 2004. Yes, I met Andrew Work at Larry Reed's Mackinac Leadership Conference in Michigan, USA in April 2004. LRI could be 1-3 months old then while Minimal Government, informally organized then, was only one month old.

I have a photo with Andrew W, Parth Shah and Barun Mitra last night, waiting for that photo. Andrew, Parth and I were batchmates at the Mackinac Conference for three days. Our other Asian batchmates that time have dropped out from the free market movement one by one. After Michigan, we went to Chicago to attend the Atlas Liberty Forum and that's where I also met Barun for the first time.

Among the highlights of the night was the presentation of LRI's student interns. A youtube video clip was shown how the interns have argued at the HK Legislative Council (LEGCO) opposing certain proposals like more (and endless) subsidies to certain sectors, wage control, etc.

From left (?? means I don't know them): Simon Lee, Andrew Shuen, ??, ??, ??, Kellie Wong, Janice Fung, Jude Law, Bill Stacey, Peter Wong (LRI Exec. Dir.), Raymond Ho (Momentum 107 convenor and LRI friend), Andrew Work, and Wilson Li, LRI staff. Not in the photo is another intern, Laurence Milton Pak.

I met Janice and Jude during the 1st Reading Club Salon 2012, held at Harbour Plaza at the New Territories. They were the two interns who helped organized the event.

Salute to LRI and its founders and officers.  10 more years, and more.
All photos above from LRI guys' fb walls, including Jadranco Brkic. Thanks.
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See also 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World", November 03, 2014

EFN Asia 43: Day 1 of Conference 2014

The Economic Freedom Network (EFN) Asia 2014 Conference started today at the Harbour Grand Hong Kong. Nice venue, great forum with great speakers, and many participants from Asian countries, from the US, Canada and Germany. The event is jointly sponsored by the Lion Rock Institute (LRI) in HK, EFN Asia in Bangkok, and the Friedrich Naumann Foundation for Freedom (FNF) in Berlin Potsdam, Germany.

Opening and Welcome Addresses were given by Bill Stacey, Chairman of LRI, and Siegfried "Siggi" Herzog, the new FNF Regional Director for East and Southeast Asia. Below, Siggi giving the welcome message.

The MC for the day was Wan Saiful Wan Jan of IDEAS Malaysia. From the Philippines, there are five of us here -- Dr. Vic Abola of  the Philippine Economic Society (PES), Tony Abad and Rhea Lyn Dealca of the Foundation  for Economic Freedom (FEF), Narwin Espiritu of FNF Manila, and me. FNF Philippines Country Director Jules Maaten arrived late today as there are a number of FNF activities in Manila until yesterday.

Dr. Razeen Sally delivered the Keynote Address, "Capitalism in Asia: Economic Growth and Inequality". Very articulate and clear defense of capitalism or market economy, innovation, competition, mass production and rising standard of living of the people in many parts of the planet. He concluded his speech with good and bad news.

The good news is that the world and its people today are much wealthier, healthier, higher economic freedom, mature institutions, compared to the people a century or many decades ago. The bad news is that governments almost anywhere are getting more interventionist and bureaucratic, often with no distinction between macro and micro, meaning even micro (community, firm, household and individual) levels are being monitored and regulated (micro-management).

Two distinguished reactors followed. Parth Shah of the Center for Civil Society (India) and Choi Byung-il of Ewha Woman's University (S. Korea) gave their thoughts on the subject of growth and inequality, while LRI Chairman Bill Stacey (middle in this photo) was the moderator.

I met a number of old friends whom I met last time about four or five years ago. Like Neena Moorjani, now with the Asian Trade Center in Singapore, andArpita Nepal of Samriddhi-Prosperity Foundation  in Kathmandu. Below, a group photo of participants from South Asia (India, Pakistan, Bangladesh, Sri Lanka,...)

The next round was the "Asian Cafe". Participants moved around in 5 groups representing 5 Asian economies and a resource speaker from each country gives a brief discussion about their country and the state of growth and inequality there. Here, Peter Wong (right, facing the audience), Exec. Director of LRI, spoke about HK. Many of the questions were about the protests by the "Umbrella Movement" or "Occupy Central" movement.

The last panel in the afternoon was about "Property Rights and Equality". Below, Lorenzo Montanari of the Property Rights Alliance (PRA) and Americans for Tax Reforms (ATR) in Washington DC, briefly discussed about the result of the International Property Rights Index (IPRI) 2014 Report.

The panel moderator and speakers in that session were, from left: Ken Schooland of Hawaii Pacific University, Andrew Work, co-founder of LRI and currendly editor-in-chief of the Harbour Times, Barun Mitra of Liberty Institute in  India, Michael Feng of CASS/Unirule Insitute in China, and Thitinan Prongsudhirak of the Institute of Security and International Studies in Thailand.

Many insightful ideas from the four speakers. We adjourned about 4pm, and we go back at 6pm for the cocktails and later, dinner program. Fred McMahon of Fraser Institute (Canada) will discuss the result of the Economic Freedom  of the World (EFW) 2014 Report. Then HK's Finance Secretary John Tsang will give a Keynote Address during dinner.

An after dinner program will be held in  honor of LRI's 10th Anniversary.
Photo credits -- from Jadranko Brkic, FNF S and SE Asia, Olaf Kellerhoff, Lorenzo. Thanks.

To be continued later...
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See also: 

EFN Asia 39: Rainer Adam's Farewell Letter, June 17, 2014

EFN Asia 40: Liberalism, Growth and Reducing Inequality, August 19, 2014

EFN 41: Program of Conference 2014, Hong Kong, September 30, 2014

EFN 42: Other Speakers in Conference 2014, November 04, 2014

Lion Rock 15: Mary Ruwart's Book, "Healing Our World"

The Lion Rock Institute (LRI) Reading Club Salon 2014 on the theme, "Class and Inequality" will be held tomorrow here at Harbour Grand Hong Kong. Among the reading assignments for participants is this book by Mary Ruwart, published in 1992, revised in 1993 and 2003.

It's a nice book, 22 chapters. There are five suggested chapters for the round table discussion.

Chapter 8, "Destroying the Environment".

Mary mentions various layers of aggression. These are the different layers, from the base layer of No Aggression to  the 4th layer. Monopoly (via government franchising, other schemes) means preventing or prohibiting other players to come in and compete with existing player.  Subsidy means the rest of taxpayers will pay (by force and coercion of course) to give special privileges to the recipients of subsidies.

Chapter 14 is "The Pollution  Solution". Here is the chapter summary.

The next three chapters are about foreign policy. Chapter 18, "Beacon to the World" is about foreign aid and why it can amplify the underdevelopment problem of many poor countries, rather than help solve it. There is truth to this because by nature, foreign aid is government to government. So if the recipient is a dictatorship or simply highly corrupt government, then the taxes of rich country citizens are simply used to further enrich those dictators, their cronies and consultants.

Chapter 19, "Is Communism Really Dead?" Yes, if it is a voluntary commune or collectism, it should be fine, meaning people have arranged things that are mutually beneficial for all. But if it is forced commune or coerced collectivism, then people are forced and coerced to share with the rest, including the lazy, shrewd and opportunists. Why be industrious when you can get something even if you're lazy and irresponsible.

Chapter 20, "Making Our Nation Safe and Secure". It is a long chapter dealing with various historical and recent events in the last decade like post 9/11.

Mary's book is suggesting that if we want a more peaceful, more dynamic world, then various layers of aggression and government coercion should drastically shrink, some policies and regulations should outrightly be removed and withrawn. There is nothing wrong if people will trade with each other voluntarily. Nothing wrong if people settle disputes among themselves peacefully and amicably. Only when the dispute can possibly get out of hand, then government can come in to enforce rules and contracts, before people practice aggression towards other people.

Thus, various aggression and coercion by government -- local, national, international/multilateral -- creates new class in society. They can worsen rather than limit inequality and animosity in  society. Government and its coercive powers must shrink.
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See also 

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality, October 27, 2014

Lion Rock 14: Reading Club Salon 2014, on Class and Inequality

Next week, I will attend the Reading Club Salon 2014, the 3rd annual round table discussion sponsored by the Lion Rock Institute (LRI), Hong Kong's free market think tank. The theme of this year's discussion will be "New Class, New Inequality?"

The theme of the EFN Asia Conference 2014, to be held also next week in the same hotel will be on Liberalism and Inequality. So the LRI event provides additional theoretical discussions to the EFN conference.

Unlike in the previous two Reading Club Salon in 2012 and 2013 where there were many reading materials, this year, there will be only three books to read. The sessions and books for the whole day discussion are:

Session I: Class vs. Inequality

• The New Class by Milovan Djilas (1957), Chp 3, The New Class

Session II: Inequality: Rooted in Economics?

• The New Class by Milovan Djilas (1957) Chp 4, The Party State

Session III: Attempts for an Equal Society: Creation of a New Inequality?

• The Adventures of Jonathan Gullible by Ken Schoolland (1995), Chp 26, 29, 36, 37

Session IV: The Path to a Truly Equal Society
• Healing Our World by Mary Ruwart (1992), Chp 8, 14, 18, 19, 20

And here are the two other books, hard copy.. I first met Ken and Mary in 2007 in Hawaii, during the first Pacific Rim Policy Exchange sponsored by the Americans for Tax Reforms (ATR), International Policy Network (IPN, London), Property Rights Alliance (PRA), LRI and the Grassroot Institute Hawaii (GIH).

From Djilas' book, Chapter 3:

The greatest illusioп vas tћat industrialization апd  collectivizatioп iп the U.S.S.R., апd destructioп of capitalist ownership, would result in а classless society.  Iп 1936, vheп tће new Coпstitutioп was promulgated, Stalin aпnouпced  tћat the "exploiting class"  ћаd ceased to exist. The capitalist and other classes of ancient origiп had iп fact been destroyed, but а new class, previously unkпovn t.o history, had been formed.

It is understandaЬle that this class, like those before it, should believe that the estaЬlishment of its pover vould result in happiness and freedom for all men….

This new class, the bureaucracy, or more accuтately the polltical bureaucracy, has all the characteristics of earlier ones as well as some пеw characteristics of its оwп. Its origiп had its special characteristics also, even tlюugh in essence it was similar to the begiпnings of other classes.

This is a straightforward discussion of the ugly nature of the bureaucratic class. Neither capitalists nor workers. Just plain regulators, tax/revenue collectors and spenders. They are the class that immediately becomes the ruling power after a successful socialist revolution, like what happened in Soviet Russia.

A "classless" society is impossible even in theory because government will always create a group of men and women, elected or appointed, who will command and control the rest of the population what are allowed and not allowed, what kind of penalties and fines to impose on violators, create new regulations and prohibitions  in order to address and correct past government failures.

Djilas continued,

In loose terrпs, as the new class becomes stronger and attains а more perceptible physiognomy, the role of the party diminishes. The core апd tће basis of the new class is created in the party and at its top, as well as in tће state political organs. The once live, corпpact party, full of initiative, is disappearing to Ьесоrпе transformed into the traditional oligarchy of the new class, irresistibly drawiпg into its ranks those who aspire to join tће nеw class and repressing those wћо ћаvе any ideals.

Тће party makes the class, but tће class grows as а result and uses the party as а basis. Тће class grows stronger, wћile the party grows weaker; this is the inescapable fate of every Communist раrtу in power.

As the state grows, the ambitions and desire for power of those who administer the state, the top Party officials and their lieutenants in the various bureaucracies also grow. I am not convinced though that the Communist Party becomes weaker as this political class becomes stronger. The Party is the chief machinery, the provider of institutional legality for the various polcies, programs and regulations of the state in ruling over ordinary mortals.

Discussions to be continued....
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See also 

Lion Rock 10: On Having Centralized or Self-Government, October 17, 2013 

Lion Rock 11: Barun Mitra on Democracy, Reading Salon 2013, October 28, 2013 

Lion Rock 12: Bill Stacey on Free Markets, Big Government and Hong Kong, March 10, 2014

Lion Rock 13: LRI Position on the Hong Kong Protests, October 08, 2014