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| 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.