|Hong Kong has more economic freedom than any other place on Earth, so why is democracy so important?|
As pro-democracy demonstrations have sprung up in Hong Kong in recent weeks, the territory continues to rank first in the world in terms of economic freedom, according to the just-released Fraser Institute Economic Freedom of the world index, a collaborative effort of more than 100 research groups in 90 countries and territories. Yet, democracy is no guarantee of prosperity, and Hong Kong has never been a democracy — so why is democracy important now?
Hong Kong is an economic miracle. The territory was devastated by the Second World War. At the time, it was poorer than most African countries. It had no natural resources and not much potential as a trading hub. It’s giant neighbour, China, was in turmoil and would soon become a communist country. Japan was ruined and much of Asia was as destitute as Hong Kong itself. Yet Hong Kong rose to become one of the world’s great cities. How did this happen?
Economic freedom, not democracy, has driven Hong Kong’s exceptional growth. It is important to remember that democracy and freedom are not the same thing. Democracy is a power structure; freedom is the ability to do what you want with your life. In creating prosperity, the ingenuity of individuals and families triumphs over government planning and the greedy elites of crony capitalism. Although Hong Kong is lacking many of the political freedoms Canadians take for granted, it boasts high levels of other freedoms: personal, speech, association, media and religion.
The Chinese government is intent on censoring the press and corrupting the rule of law
All that is now under threat. Despite its “one country, two systems” pledge, China clearly aims over time to impose its system of governance on Hong Kong. A media chill has long been evident in Hong Kong, as the press self-censors. Now China wants to halt what it once promised — Hong Kong’s evolution to democracy. The issue is the selection of candidates. China has promised universal suffrage, but only if it gets to choose all the candidates for chief executive officer — long a trick of communist regimes, which sometimes offered people a vote, but only for communists.
Why is Hong Kong’s prosperity threatened? Western media portrays China itself as an economic miracle, open to free markets and wisely charting the turbulent waters that lead to its turbo-charged growth. This is fallacy. China consistently ranks around 100 of the 152 jurisdictions that the Fraser Index measures in terms of their levels of economic freedom — the best available measure of free markets. Compare this to Hong Kong’s status as number one.
To understand what’s going on, imagine a country that makes abysmal public policy decisions, as China did under Mao. Its policies are so horrid that the economy cannot grow beyond a per capita income of $1,000 a year. Then it moves from having abysmal to bad policies, as it did after Mao’s death, and that level of policy can produce an income of about $10,000 per capita. This is what happened to China. It moved from abysmal to bad policy, and that generated new growth, creating the impression of an economic miracle.
Yet, if a country does not continue to reform and expand economic freedom, it stalls out at the new income level — what is known as the “middle income trap” — and the “miracle” ends. China has reached that point. It is rife with state economic interference, state-owned “companies,” corruption, crony capitalism and it has failed to uphold the rule of law.
Chinese General Secretary Xi Jinping’s anti-corruption drive appears largely aimed at his rivals. That is certainly the case in Hong Kong. There, “anti-corruption” forces have raided the home of media mogul Jimmy Lai, who just happens to be a supporter of democracy. He has faced death threats, a fake obituary and the withdrawal of advertising from his newspaper by firms such as HSBC and Standard Chartered, reportedly under Chinese pressure. Earlier this year, China issued a report on Hong Kong, which said that judges had a “duty” to be patriotic to China — in other words, to toss out the rule of law and obey Xi and the Beijing clique.
This highlights the greatest threat to Hong Kong — its besieged rule of law. The rule of law is the infrastructure of economic and other freedoms. Without it, the rich and powerful use their position to undermine the freedom of others.
A senior justice administrator in Hong Kong once told me that busloads of mainland Chinese passed through Hong Kong offices to hear explanations of what the rule of law is. When I asked him if they got it, the response was: “not a clue.”
All this is why democracy is important. The people of Hong Kong need it to protect the rule of law and their freedoms from the Chinese government, which would turn the rule of law into a political instrument. Corrupting the rule of law in Hong Kong and eroding the freedoms of its people would be an attack on the territory’s future prosperity and international standing. With democracy, the people of Hong Kong will never allow it.