Blogging from the Highlands of Scotland until I return to the Murcia region of Spain towards the end of January 2018 for about a month
'From fanaticism to barbarism is only one step' - Diderot

Wednesday, 25 January 2006

Sir John Cowperthwaite (1915-2006) - Rest in Peace

Who he? Well, he is widely credited with putting in place the policies which allowed Hong Kong, where he was Financial Secretary from 1961 to 1971, to become not just a trading outpost on the coast of China but a regional economic and manufacturing powerhouse.

How come? Well he ensured that the HK government kept its fingers out of the serious business of allowing Chinese entrepreneurial flair to transform the territory. Taxes were kept low, business flourished, but the government nevertheless managed to build massive quantities of low-cost housing for the huge influx of immigrants from mainland China who, by hook or by crook, were determined to reach the promised land which they believed, quite rightly, Hong Kong to be under his economic tutelage. His strategy was to allow laissez-faire economic policies do the work of raising real incomes dramatically whilst fuelling an export-led boom, not to mention high levels of individual savings - my amahs knew the gold price, by the hour, much better than me and their knowledge of how stock markets functioned wasn't bad either.

Commenting on the mechanism which governed the HK Dollar peg against Sterling (later, after his time, against the US Dollar) he remarked that even the management of the Hongkong & Shanghai Banking Corp., now ubiquitously known as HSBC, did not necessarily understand the system they operated on the government's (i.e. his) behalf:

"Better they shouldn't. They would mess it up."

- slightly insulting for me as a former HSBC employee(!), but possibly at the time not so far from the truth, although I think by the time I was around, in the 1980s, I think most of us (... er) understood the peg against the US Dollar, just about.

Sir John Cowperthwaite died last weekend aged 90 and you can read a full obituary in today's Telegraph here. This exponent of free-trade, in the finest tradition of Adam Smith etc, leaves a proud legacy which today is having a big impact on the Chinese economy next door - and by extension on the whole world. Not unfortunately in the UK, where Gordon Brown follows quite different, and far less successful, policies.

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