John James Cowperthwaite: Economics

“We suffer a great deal today from the bogus certainties and precisions of the pseudo-sciences which include all the social sciences including economics.”

John James Cowperthwaite

March 27, 1968, page 213.
Official Report of Proceedings of the Hong Kong Legislative Council
Context: But what I really believe is that both he and Mr Wong are innocently guilty of the twentieth century fallacy that technology can be applied to the conduct of human affairs. They cannot believe that anything can work efficiently unless it has been programmed by a computer and have lost faith in the forces of the market and the human actions and reactions that make it up. But no computer has yet been devised which will produce accurate results from a diet of opinion and emotion. We suffer a great deal today from the bogus certainties and precisions of the pseudo-sciences which include all the social sciences including economics. An article I recently read referred to the academic’s “infernal economic arithmetic which ignores human responses”. Technology is admirable on the factory floor but largely irrelevant to human affairs.

Suffering , Science

“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.”

John James Cowperthwaite

March 24, 1966, page 216.
Official Report of Proceedings of the Hong Kong Legislative Council

Pain , Exercises , Decision

“I will not be proposing a course which has been under some public discussion recently — deficit financing. It is wholly inappropriate to our economic situation. In its least extreme form it is based on the theory that additional money generated by a Government deficit (and given currency, as necessary, by use of the printing press) will stimulate consumption and thereby production, in time to match the excess money with goods before real inflationary harm is done. Unfortunately we don't, and can't, produce more than a small fraction of what we consume, and increased consumption would merely mean increased imports without matching exports; and a severe balance of payment crisis, which would destroy Hong Kong's credit and confidence in the Hong Kong dollar; and which we could not cure without coming close to ruining ourselves. Keynes was not writing with our situation in mind. In this hard world we have to earn before we spend.”

John James Cowperthwaite

February 27, 1963, page 50.
Official Report of Proceedings of the Hong Kong Legislative Council

Money , World , Confidence , Time

“Revenue has increased in this way is in no small measure, I am convinced, due to our low tax policy which has helped to generate an economic expansion in the face of unfavourable circumstances”

John James Cowperthwaite

February 26, 1964, page 53.
Official Report of Proceedings of the Hong Kong Legislative Council

Way , Help

“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.”

John James Cowperthwaite

March 30, 1962, page 133.
Official Report of Proceedings of the Hong Kong Legislative Council

“If one accepts that in general social services should be made available to all on the basis of ability to pay, one has the choice of two opposite principles of action, although they need not be mutually exclusive—either progressive taxation and free services or fees covering costs with remission for those who cannot afford them. The former method is appropriate, in my view, in rich developed countries where the principle of progressive taxation can be applied without unduly adverse economic or social results, and the wastes inherent in full and free services can be afforded. In less advanced or poorer countries, where neither economy nor society is geared to progressive taxation and waste cannot be tolerated, fees remittable in case of need seem to me clearly more appropriate.”

John James Cowperthwaite

February 26, 1964, page 54.
Official Report of Proceedings of the Hong Kong Legislative Council

Country

“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.”

John James Cowperthwaite

February 26, 1964, page 47.
Official Report of Proceedings of the Hong Kong Legislative Council

School , Thinking

“I cannot myself believe that anyone in this Chamber, and very few in the community as a whole, would wish to reverse all our previous policies and choose stabilization rather than growth; and it would certainly go contrary to the other views expressed by honourable Members about the need to promote the further growth of trade and industry. Not only would we be fore-going the creation of additional wealth and what this can bring, and has brought, in social advance, but we would also, I believe, permanently damage that climate of economic activity which has taken us so far and so fast. This would be particularly unwise, I suggest, in the face of those relatively darker clouds referred to by Your Excellency.”

John James Cowperthwaite

October 9, 1970, page 114.
Official Report of Proceedings of the Hong Kong Legislative Council

Communication , Wealth

“There was a plea from honourable Members relating to the need for formal Gross National Product figures. Such figures are very inexact even in the most sophisticated countries I think they do not have a great deal of meaning, even as a basis of comparison between economies. That other countries make use of them is not, I think, necessarily a good reason to suppose that we need them. But, although I am not entirely clear what practical purpose they would serve in Hong Kong, I am sure they would be of interest. I suspect myself, however, that the need arises in other countries because high taxation and more or less detailed Government intervention in the economy have made it essential to be able to judge (or to hope to be able to judge) the effect of policies, and of changes in policies, on the economy. One of the honourable Members who spoke on this subject, said outright, as a confirmed planner, that he thought that they were desirable for the planning of our future economic policy. But we are in the happy position, happier at least for the Financial Secretary where the leverage exercised by Government on the economy is so small that it is not necessary, nor even of any particular value, to have these figures available for the formulation of policy. We might indeed be right to be apprehensive lest the availability of such figures might lead, by a reversal of cause and effect, to policies designed to have a direct effect on the economy. I would myself deplore this.”

John James Cowperthwaite

March 25, 1970, page 495.
Official Report of Proceedings of the Hong Kong Legislative Council

Hope , Exercises , Thinking , Change

“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.””

John James Cowperthwaite

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.
March 27, 1968, page 213.
Official Report of Proceedings of the Hong Kong Legislative Council

Way , Fashion , Sense , Freedom