John James Cowperthwaite Quotes

I myself have no doubt in the past tended to appear to many to be more concerned with the creation of wealth than with its distribution. I must confess that there is a degree of truth in this, but to the extent that it is true, it has been because of my conviction that the rapid growth of the economy, and the pressure that comes with it on demand for labour, both produces a rapid and substantial redistribution of income directly of itself and also makes it possible to assist more generously those who are not, from misfortune temporary or permanent, sharing in the general advance. The history of our last fifteen years or so demonstrates this conclusively.

I have three objections to my honourable Friend’s wider proposal that exchange control powers be used to require the fixing of exchange by merchants on entering into both export and import contracts. The first is that I think it excessively paternalistic to require a merchant to protect himself against a risk he is prepared to take. Secondly, I think it wrong to impose a condition which is likely to cause one group of merchants a loss, for the purpose of providing the other group with protection at no cost to them. Thirdly, I do not think it is in fact practicable to enforce such a system. I am sorry to be so negative, but I am sure that the solution to my honourable Friend’s problem should not depend on compulsion but on the provision of voluntary protection on insurance principles.

Over a wide field of our economy it is still the better course to rely on the nineteenth century's "hidden hand" than to thrust clumsy bureaucratic fingers into its sensitive mechanism. In particular, we cannot afford to damage its mainspring, freedom of competitive enterprise.

A glimmer of light is better than no illumination at all.

I still believe that, in the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralized decisions of a Government; and certainly the harm is likely to be counteracted faster. As I said earlier in this debate, our economic medicine may be painful but it is fast and powerful because it can act freely.

I should like to begin with a philosophical comment. I do not think that when one is speaking of hardships or benefits one can reasonably speak in terms of classes or social groups but only in terms of individuals.

One of the things that most surprises me about my honourable Friend’s remarks is that he characterizes his proposal for state intervention in, and control of, industry as “innovation and a spirit of adventure” and condemns free private enterprise as “prosaic precedent”. This is a strange paradox. I would put it precisely the other way round. What he advocates is based on the “prosaic precedent” of many of our rivals who have to resort to wooing industry with artificial aids and have had remarkably little success at it. Recent events have shown that enterprising spirits still prefer our economic freedom to the restrictive swaddling clothes offered elsewhere. Possibly I am a romantic in this but I, for one, do not believe that our spirit of adventure is in need of artificial stimulation — nor do I believe that we can afford the wasteful application of our scarce resources which they would entail—we are neither desperate enough, nor rich enough, for such expedients to make economic sense. It is, of course, all the fashion today to cry in any commercial difficulty, “why doesn’t the Government do something about it”. But I would rather go back to the old days when even the most modest attempt by Government to intervene in commerce and industry was rudely rebuffed.

I largely agree with those that hold that Government should not in general interfere with the course of the economy merely on the strength of its own commercial judgment. If we cannot rely on the judgment of individual businessmen, taking their own risks, we have no future anyway.

Official opposition to overall economic planning and planning controls has been characterized in a recent editorial as "Papa knows best". But it is precisely because Papa does not know best that I believe that Government should not presume to tell any businessman or industrialist what he should or should not do, far less what he may or not do; and no matter how it may be dressed up that is what planning is.

It seems to me that we have three choices; first, public services of high standard and cost but of limited scope, leaving unfilled a substantial part of the present gap, not necessarily benefiting those in real need and benefiting many who are not in need at all (this has been our historical approach); second, public services to meet the requirements of all, with the beneficiaries making a contribution by way of fee according to their means, and with adequate provision for complete remission in suitable cases; or third, universal public services provided for rich and poor alike on terms the poorest can afford; that is, the welfare state where all benefit and the whole cost is met by the taxpayer in general. I think it is well-known that I am an advocate of the second approach.

I am confident, however old-fashioned this may sound, that funds left in the hands of the public will come into the Exchequer with interest at the time in the future when we need them.

Economists of the modern school will no doubt protest that I have said nothing of the use of budget deficits or surpluses for the control of the economy in general. I doubt if such techniques would ever be appropriate in Hong Kong's exposed economic position; and I think they are certainly not appropriate at present, when in strict orthodoxy they would suggest the need to plan for a very substantial surplus "to take the heat out of the economy". Although we have in fact run substantial surpluses in recent years we have not done so with deflationary effect because we have not removed them from the economy but have left them inside the Colony's banking system to continue to work for the economy. $500 million or 55% of reserves are so held at present.

We enjoy a considerable net inflow of capital and I am sure that a condition of its coming, and staying, is that it is free to flow out again. It is also important for Hong Kong's status as a financial centre that there should be a maximum freedom of capital movement both in and out.

The fact that previous generations have handed down to us a substantial public heritage by way of roads, port, etc. almost completely free of debt, seems to me to impose some limitation on the validity of the theory that by borrowing we should, or could, pass on the burden of development to the next generation.

What mystifies me is how he or any one else can determine what is a desirable type of industry such as should qualify for special assistance of this kind. In my own simple way I should have thought that a desirable industry was, almost by definition, one which could establish itself and thrive without special assistance in ordinary market conditions. Anything else suggests a degree of omniscience which I, at least, am not prepared to credit even the most expert with. I trust the commercial judgment only of those who are themselves taking the risks.