Saturday, February 04, 2006

Tribute to Sir John Cowperthwaite

Sir John Cowperthwaite, Hong Kong's Financial Secretary from 1961 to 1971 passed away on Jan 21, 2006 aged 90. His name came to my attention when reading James Bartholomew's, The Welfare State We're In. Here is an excerpt from a tribute by Marian L Tupy;

At some point during our first conversation I managed to irk him by suggesting that he was chiefly known "for doing nothing." In fact, he pointed out, keeping the British political busy-bodies from interfering in Hong Kong's economic affairs took up a large portion of his time. Throughout Sir John's tenure in office, the British political elite tried to impose its own ailing socialist economic model on Britain's colonies, including Hong Kong. Sir John managed to quash all such attempts and Hong Kong benefited as a result.

In 1960 Britain's productivity per capita was fives times Hong kong's. Hong Kong has always maintained the low taxes Cowperthwaite championed. Here is the effect;

Now Hong Kong has climbed to eighth and UK is 20th.
John Cowperthwaite's legacy.

In Bartholomew's words; "Cowperthwaite's most important reason for playing Scrooge was to keep taxes down. He thought high taxes slowed economic growth. Low taxes would eventually produce more revenue than higher ones, he argued, because of the growth they would encourage. Fast growth would also benefit the poor by boosting demand for labour and pushing up wages. Fast growth produced a 'rapid and substantial redistribution of income'. Successful capitalism benefited the poor."

He was right.

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