October 20, 2017
By Marian L. Tupy
It took 28 years, but the rule of law is slowly emerging in Slovakia. Two former government ministers from the Slovak National Party, an erstwhile coalition partner of the current socialist Prime Minister Robert Fico, have been found guilty of corruption.

Marián Janušek and Igor Štefanov have been sentenced to 12 years and nine years respectively. The court’s verdict marks the first time since the fall of communism that government officials have been held to account in a Central European country whose public officials are renowned for lack of transparency and accountability.

While the case might seem to be of little interest beyond Slovakia’s borders, the story highlights broader issues related to the spending of the European Structural and Cohesion Funds as well as to the difficult birth of the rule of law in ex-communist members of the European Union.

The case in question dates back to 2007, when Marián Janušek, who was in charge of the Ministry of Construction and Regional Development, awarded a contract worth 120 million euros to firms close to his party boss, Jan Slota.  Janušek “advertised” the tender for mere four days on a notice board in an inaccessible passage way of a government building, thereby contravening the country’s government procurement laws, which require a far more transparent bidding process.

After the story broke, triggering a public outcry, Janušek was forced from office. His replacement, another Slovak National Party apparatchik, Igor Štefanov, then attempted to sabotage the investigation into his predecessor. Brussels, which was to pay for the tender out of the European Structural and Cohesion Funds, got involved, the contract was revoked, and Štefanov was forced out of office. Ten years later, the two men were finally found guilty of corruption. They will appeal the verdict.

Slovakia ranks 54th in the 2017 Transparency International Corruption Perception Index – lower than Rwanda, but higher than Romania. As was the case with many other ex-communist members of the EU, prior to accession, Slovakia passed a plethora of laws and regulations aimed at ensuring clean government and the transparent disbursement of the EU funds.

Political culture, alas, lagged far behind the anti-corruption legislation, which lay largely dormant and conspicuous in its non-enforcement. If anything, EU membership worsened the corruption problem that was ever present in before independence. Large sums of money from net contributors to the EU budget, such as the UK and Germany, and non-EU contributors to the EU’s financial transfer schemes, such as Norway and Switzerland, flooded poorly run ex-communist countries like Slovakia. I warned of the associated risks in a 2006 paper, “The Rise of Populist Parties in Central Europe: Big Government, Corruption, and the Threat to Liberalism.”

So, what has changed? Unlike tax policy or free trade agreements, the rule of law cannot be implemented overnight. Unless it is imposed from outside, it has to evolve incrementally. As such, a happy confluence of developments has contributed to the watershed judgement.

First, the expectations of the Slovakian people have changed. In the communist days, corruption was a way of life and, consequently, accepted as unavoidable. Younger generations, however, have been exposed to cleaner governments by working or studying abroad. They have come to expect from their government standards of transparency and accountability that they saw in the West. Second, a corrupt older generation of judges has either retired or been sidelined by a new, more professional generation. Third, economic development and the subsequent rise in the standard of living has greatly increased judges’ incomes, making them less susceptible to bribes.

Lastly, the media is freer than it was. Investigative journalists are more sophisticated than they used to be, secure in the knowledge that they will not be harmed for reporting on official misbehavior. In this respect, EU membership has been a positive. No ex-communist member state of the EU wants to be seen to facilitate the harassment of journalists. That is not to say that journalists in ex-communist countries are as inviolate as they are in mature democracies, like the UK. But the position of the media is certainly better than it was in the years immediately following the end of communism.

Is Slovakia out of the woods yet? Not by a long shot. As I have noted in a previous column, the Slovak Prime Minister is a deeply corrupt man, whose practices remain uninvestigated courtesy of his equally corrupt Minister of the Interior, Robert Kalinak.

However, that these two men at the top of the government and in charge of the police force could not thwart the court’s groundbreaking judgement against their former cabinet colleagues does qualify as progress of sorts. Let’s hope it is a harbinger of many more such rulings to come.

This first appeared in CapX.
A tragic boiler explosion killed 10 Bangladeshi garment workers over the summer, an incident reminiscent of the catastrophic 2013 Rana Plaza building collapse, which focused public attention on working conditions in that developing country. Last month, a factory fire killed six more workers. In the wake of such disasters, many people in rich countries assume the compassionate response is to impose trade restrictions and stop buying clothes made in Bangladesh.

Ironically, such a response would actually harm Bangladeshi garment workers, most of whom are women, by forcing them into far worse situations than factory work.

What many people do not know is that the rise of factory work in the country has helped bring about significant positive change in many Bangladeshi lives—particularly for women.

The country is home to 18.4 million of the world’s poorest people and has strict gender norms. Yet Bangladesh was recently called “the happiest economic story in the world right now,” as extreme poverty has plummeted.

Despite its dangers, factory work has slashed extreme poverty and increased women’s educational attainment while lowering rates of child marriage in Bangladesh. It has also sparked cultural change towards more freedom for women, not only by enabling them to earn money but by granting them freedom of movement.

The country’s women-dominated garment industry transformed the norm of purdah, or seclusion (literally, “veil”), that traditionally prevented women from working beyond the home, walking outside unaccompanied by a male guardian, or even speaking in the presence of unrelated men.

Many Bangladeshi women now interpret purdah to simply mean modesty instead of social and economic segregation. In the words of social economist Naila Kabeer of the London School of Economics, factory work let women “renegotiate the boundaries of permissible behavior.” Today, in Dhaka and other industrial cities, women walk outside and interact with unrelated men.

When Kabeer interviewed 60 factory women in her native Bangladesh, she found that the factories had expanded women’s options and were viewed positively overall. More and more experts share that assessment. The World Bank has acknowledged that factories play “a significant role” in reducing poverty and combating child marriage. The Financial Express’ Monira Munni stated earlier this year that factories have “socially empowered women workers in Bangladesh to have better control over their own lives.”

According to Kabeer, “it took market forces, and the advent of an export-oriented garment industry, to achieve what a decade of government and non-government efforts had failed to do: to create a female labor force.”

The country industrialized rapidly, growing its number of export-oriented factories from a handful in the mid-1970s to around 700 by 1985. Women now hold more than 80% of manufacturing jobs.

The expansion of manufacturing in the country met with challenges early on. In 1985, Britain, France, and the United States imposed quota limitations on imports from Bangladesh in response to anti-sweatshop campaigns financed by labor unions in the rich countries. Within three months, two thirds of Bangladeshi factories shuttered their gates and over 100,000 women were thrown out of work, many to face destitution.

The quotas were, in short, a disaster for Bangladeshi women. Britain and France removed their quotas in 1986, and Bangladesh’s garment industry has since expanded to thousands of factories employing millions. Unfortunately, protectionist sentiment is growing in rich countries, aided by sensationalized accounts of working conditions. The Bangladeshi General Secretary of National Garment Workers has warned that these could restrict Bangladesh’s growth.

Despite their frequent depiction as passive victims, Bangladeshi factory women are making their own choices. Kabeer’s research found that “the decision to take up factory work was largely initiated by the women themselves, often in the face of considerable resistance from other family members.”

Yet societal change is definitely underway. “Garments have been very good for women,” a factory woman named Hanufa, whose earnings allowed her to escape her physically abusive husband, told Kabeer. “Now I feel I have rights, I can survive.”

In fact, the earning power of women is eroding the custom of bridal dowries, and earning power typically increases the weight a woman’s priorities carry within the household.

Tragedies like the Rana Plaza building collapse garner a lot of press. The garment industry’s wider-reaching effects on the material well being and social equality of women in Bangladesh receive less attention. Rich countries should not rush to impose trade restrictions on poor countries after disasters. As one factory worker put it: “The garments have saved so many lives.”

A version of this piece first appeared in Forbes.
October 17, 2017
By Marian L. Tupy
Last Friday, the Cato Institute hosted a forum on a new book, Neil Monnery's Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong. Sir John Cowperthwaite was the financial secretary of Hong Kong between 1961 and 1971, as well its financial under-secretary between 1951 and 1961. As such he has contributed to establishing the policies—small government, low taxes, fiscal probity and free trade—which are credited for turning a poor backwater of the British Empire into one of the richest places on earth.

When I asked Monnery, the British author of the book, to put Hong Kong's success in context, he noted that in the years following the end of World War II, Hong Kong's per capita income was one third of that in Britain. By the time of the British transfer of the territory to China in 1997, incomes in the two countries were the same. Today, the average inhabitant of Hong Kong is over 30 percent richer than the average Briton. As late as 1960, people in Hong Kong enjoyed lives that were four years shorter than those in Britain. Today, they live four years longer than their British counterparts. Economic growth, we concluded during our discussion, is key not only to rising standards of living, but also to health and life expectancy. Put plainly, the richer the country is, the better the hospitals and higher the quality of care and the environment that it can afford to buy.

That got me thinking about the region I came from and the changes that Central Europe underwent since the fall of the Berlin Wall, the 28th anniversary of which we will commemorate on November 9. Following the end of the communist period, the region went into an economic recession, as unproductive industries shut down and millions of people lost their jobs. Life expectancy started to decline, which opponents of market reforms saw as proof positive of capitalism's deleterious consequences for people's welfare. Revisiting the life expectancy statistics some three decades later, a different picture emerges. Between 1960, the first year for which World Bank data is available, and 1989 (i.e., a period of 29 years), life expectancy in the Czech Republic, Hungary, Poland and Slovakia rose by 1.33, 1.46, 3.36 and 1.05 years respectively. Between 1989 and 2015 (i.e., a period of 26 years), it increased by 7.1, 5.68, 6.44 and 5.24 years respectively. The post-communist dip in life expectancy, such as it was, proved to be small and temporary. Further afield, post-communist depression was much more pronounced in the Baltic countries, which is, in retrospect, unsurprising. These economies, being parts of the Soviet Union, were much more heavily distorted than their neighbors to the west. In other words, a deeper restructuring was necessary.

Yet, the relationship between economic growth and life expectancy still holds. In the 31 years between 1960 and 1991 (i.e., the year of the dissolution of the U.S.S.R.), life expectancy in Estonia and Lithuania, rose by 1.47 and 0.52 years respectively, while in Latvia it fell by .75 years. Between 1991 and 2015 (i.e., a period of 24 years), life expectancy rose by 7.33 years in Estonia, 2.97 years in Lithuania, and 5.02 years in Latvia.

All in all, a switch from socialism to capitalism appears to be good for the health and longevity of the citizenry.

This first appeared in Reason.
October 10, 2017
By Chelsea Follett
Rafia Zakaria made some outstanding points in her recent New York Times op-ed, “The Myth of Women’s ‘Empowerment'” – but she also made some conspicuous omissions. In her piece, she draws attention to the international aid industry’s flawed and patronizing approach to female empowerment. However, she overlooks the importance of women’s economic empowerment, focusing solely on political empowerment, as if the two were not intimately linked.

Zakaria eloquently summarizes some of the problems with Western development professionals and their organisations. In particular, she says, their top-down approach to development, with its narrative of heroic humanitarians bestowing charity upon the world’s poorest women, is profoundly condescending. “Non-Western women are reduced to mute, passive subjects awaiting rescue,” Zakaria writes.

Patronizing attitudes aside, development professionals are also largely ineffective at alleviating poverty. The feel-good programs that give chickens to poor women, for example, don’t lead to any long-term economic gains.

These criticisms have been made before. New York University’s William Easterly has documented in great detail how the top-down “technocratic” approach to development often serves only to enrich “expert” development professionals and dictators in poor countries. The documentary Poverty, Inc. similarly shines light on the problems plaguing the aid industrial complex.

The truth is that aid has never lifted a single country out of poverty and in some cases even hinders international development. Haiti is famously host to over 10,000 aid NGOs, but the inpouring of charity has perversely harmed local industries and led to a cycle of dependence that worsened poverty.

As we know, poverty renders women particularly vulnerable. Indeed, a review of the development literature, published in the Journal of Economic Literature, suggests that “gender inequality declines as poverty declines, so the condition of women improves more than that of men with development”. In other words, women’s social empowerment is intimately connected to economic empowerment, and women stand to gain the most from prosperity.

Letting women achieve greater economic clout enables them to lobby for social change, from which flows political and legal change. Milton Friedman stated that “economic freedom is … an indispensable means toward the achievement of political freedom." In some countries, women are still not even legally allowed to pursue paid employment without spousal permission. As my colleague Guillermina Sutter-Schneider notes, “Gender equality under the law improves as countries become more economically free.”

In her piece, Zakaria does recognize that the aid industry is bad at combating poverty and promoting development, but she then, unfortunately, dismisses those goals. And yet economic development is achievable. An overwhelming amount of data shows that just within my lifetime, extreme poverty has halved, with particularly heartening progress having been made in Asia.

This economic progress was not driven by aid, but by private enterprise. Economic growth in China and India significantly outpaced Sub-Saharan Africa despite far less per person aid. That economic growth coincided with policies of economic liberalization. People in poor countries are not passive victims awaiting rescue. They possess agency and are lifting themselves out of poverty wherever they have the freedom to do so.

That is particularly true for women. Consider Bangladesh, which has seen a dramatic decline in poverty and positive change in women’s lives. As London School of Economics’ social economist Naila Kabeer observed: “It took market forces, and the advent of an export-oriented garment industry, to achieve what a decade of government and non-government efforts had failed to do: to create a female labor force.”

Industrialization has increased women’s educational attainment and lowered rates of child marriage. According to Kabeer, it has also softened the social norm of purdah or female seclusion and improved the court system’s responsiveness to women. “Garments have been very good for women,” one factory worker told Kabeer. Her earnings had enabled her to escape her physically abusive husband. “Now I feel I have rights,” she continued, “I can survive.” Escaping poverty and achieving equal rights often go hand in hand.

“The concept of women’s empowerment needs an immediate and urgent rescue from the clutches of the would-be saviors in the development industry,” Zakaria concludes, powerfully. On that much, we can agree.

I also agree that political freedoms are vital, but we must not ignore the importance of economic freedom. The alleged damsels in distress in the developing countries are completely capable of rescuing themselves if only given that freedom to do so.
September 29, 2017
By Alexander Hammond
In a speech made last Wednesday, British Prime Minister Theresa May claimed that free market capitalism is the “greatest agent of collective human progress ever created” and the only model that has “led societies out of darkness and stagnation, and into the light of the modern age.”

The speech was made just a day after Jeremy Corbyn, the opposition and Labour Party leader, stated that capitalism faces a “crisis of legitimacy” and that it is Labour’s mission to replace the “failed model of capitalism.” Corbyn critiqued Conservative Party policies, stating the party focuses on “delivering profits for a few, and debt to many.”
 

Despite Corbyn’s claims, May continued, “When countries make the transition from closed, restricted, centrally-planned economies to open, free-market policies, the same things happen: Life expectancy increases, infant mortality falls, absolute poverty shrinks, and disposable income grows. Access to education is widened, and rates of illiteracy plummet.”
 

May also noted, “It is in open free-market economies that personal freedoms and liberties find their surest protection.”  

May’s speech was most likely a deliberate attempt to counteract Corbyn’s anti-capitalist message and mounting criticism concerning her supposed lack of an appealing vision for the United Kingdom. It also coincided with the launch of Member of European Parliament Daniel Hannan’s new Institute for Free Trade. The launch was attended by three of her ministers: Michael Gove, Boris Johnson and Liam Fox.
 

May went on to say, the free market economy "is unquestionably the best, and indeed the only sustainable, means of increasing the living standards of everyone in a country." She continued, “It is in open, free-market economies that technological breakthroughs are made, which transform, improve, and save lives.”

As EU negotiations enter a critical phase, let’s hope May follows her own advice: “We should never forget the immense value and potential of an open, innovative and free-market economy
.” In order to ensure a prosperous and booming post-Brexit Britain, this sentiment is needed now more than ever.

September 29, 2017
By Human Progress Team
New Antibody Attacks 99 Percent of HIV Strains 

A team of scientists from the U.S. National Institute of Health and the pharmaceutical company Sanofi, have recently engineered an antibody that attacks 99% of all HIV strains. Currently the best antibody that occurs naturally can only target 90% of the HIV. Made from combining three different antibodies, the study, published in the journal Science, called it a “tri-specific antibody.” The antibody was tested on 24 monkeys with 100% success rate, as a result human trials will start in 2018. The International AIDS Society has called it an “exciting breakthrough.”  

Bringing Back an Extinct Species 


A team of scientists plan on restoring a species of Galapagos tortoise previously thought to be extinct. The Chelonoidis elephantopus lived on the Floreana Island and was hunted to extinction in the 1800s. By using blood samples from a related species of tortoise with genetic traces of the extinct species, the Galapagos Conservancy and the Galapagos National Park will try to restore the lost species. Although the species won’t be genetically identical to the one from Floreana, the new population will have “many of the same genes.” The Ecuadorean Minister for the Environment notes; “we can tell the world it is possible to reverse negatives effects on the environment. We are going to recover an extinct species.”  

FDA approves first 'living drug' for tough childhood leukemia


For the first time in its history the FDA has approved a gene therapy treatment, a “living drug,” which aims to combat childhood leukemia. The CAR-T treatment is developed by Novartis and genetically engineers the patients’ T-blood cells to recognize and attack cancer. The FDA noted the “historic” approval is the start of a “new frontier in medical innovation.” For now the treatment is only aimed at those diagnosed with lymphoblastic leukemia (a disease that affects 3,000 children and young adults every year.) If the CAR-T treatment continues to be a success it is likely the therapy will be available to combat more types of cancers soon.
Click here to see a larger version. This first appeared in Reason.
September 28, 2017
By Alexander Hammond
Earlier today, the Fraser Institute published the 21st edition of its annual Economic Freedom of the World (EFW) report. The Canadian think-tank uses 42 data points across five different areas (size of government, legal/property rights, sound money, freedom to trade internationally and regulation) to rank the economic freedom of 159 countries and territories.

The results? As Johan Norberg puts it, “freedom is awesome”. Which is to say that – almost without exception – the freer the country, the more rapid its economic growth, and the higher its citizens’ income.


The full report is available on the Fraser Institute’s website. But here are the key points:

America is not the real Land of the Free

Hong Kong, despite recent political upheavals, takes the top spot – as it has since 1980. For the tenth year in a row, Singapore comes in second. New Zealand, Switzerland, Ireland, the UK, Mauritius, Georgia, Australia and Estonia make up the rest of the top 10. The United States has moved up from 13th spot to 11th. There it joins Canada, which has fallen six places. Other notable rankings are Germany in 23rd place, France in 52nd, Mexico in 76th, Russia in 100th and China in 112th place.


The freer the country, the better

Why do the positions on the list matter? They matter because, as mentioned above, there is a high correlation between economic freedom and important indicators of human wellbeing.

The Fraser Institute splits the measured countries and territories into quartiles (i.e., each quartile represents a quarter of the samples) based on their level of economic freedom. The freest quartile has an average income that is seven times higher than that of the least free quartile ($42,463 and $6,036 respectively). Between 1990 and 2015, economic growth averaged 3.35 per cent a year in the freest quartile, whereas the least free experienced a measly 1.66 per cent growth.

It’s not just about money. In the freest nations, life expectancy is 80.7 years. This is 16.3 years more than in the bottom quartile. For many people, that amounts to a difference between knowing one’s grandchildren, or dying before their birth.

Finally, the freer the nation, the better off the poorest people in it are. The bottom 10 per cent of income earners in the freest quartile earned 11 times more than the bottom 10 per cent in the least free quartile ($11,998 per year and $1,124 per year respectively). In the freest countries, the poorest 10 per cent make almost twice as much as the average person in the least free countries.

Economic freedom isn’t just about the economy

For the first time, the 2017 edition of the report has adjusted its methodology to include the Gender Disparity Index (GDI). The inclusion of the index acknowledges that women are not always accorded equal treatment before the law. By using information from the World Bank’s Women, Business and Law and 50 Years of Women’s Rights projects, the Fraser authors have amended the EFW scores retrospectively.


This methodological change has meant that the Arab nations have dropped – a lot. (The report was compiled before the news broke that Saudi women will now be allowed to drive, but I don’t think it would have affected the findings much.)


In the previous report, for example, there were four Middle Eastern nations within the top 30. Now that GDI is included, not a single Arab nation ranks in the top 36. The United Arab Emirates and Qatar, which were previously the highest ranked MENA nations at 5th and 11th places respectively, are now just 37th and 45th. And the 10 countries that experienced the biggest decreases due to the GDI adjustment were all Muslim-majority nations.

The world is getting freer, faster

This is the final and most important point to make. Despite our tendency towards pessimism about the state of the world, economic freedom has increased substantially in the last 25 years – especially in developing nations.

In 1990, the average score for a “high-income industrial” country was 7.18, compared to only 5.28 for the average “developing” country. By 2015, the average score in high-income countries was 7.76 and the average in developing countries was 6.61. The gap between the two groupings has fallen from 1.90 to 1.15 – an improvement of 40 per cent. This is thanks in large part to trade liberalisation, and the widespread conquest of inflation and introduction of sound money.

The result is that, if the 1980s world average was a nation, it would place in 154th place today – ranking between war-torn Syria and anarchic Libya. If the 2015 world average was a nation in 1980, it would be the 9th freest – with a score of 6.88, slightly above Canada at the time.


The new EFW shows that despite many anomalies and challenges, economic freedom remains deeply linked to important indicators of human wellbeing, including wealth, poverty alleviation and life expectancy. As such, it is the poorest members of the human family who get the greatest benefits from it. Long may that continue.

September 19, 2017
By Marian L. Tupy
Yesterday, Bloomberg had an interesting article about food shortages in Venezuela. Contrary to popular perception, the Venezuelan shops are not empty. Bakeries, for example, offer "a wide variety of freshly-made breads," including, "a fat, dense loaf called the gallego, or a soft sobado." Conversely, "the canilla, a soft, buttery take on the baguette that's been the beloved bread of choice in this South American country for decades," is missing from the shelves. Why?

The canilla has disappeared because its price is set by the state. The price of the bread is "set at such a low level—1,500 bolivars versus the 4,500 to 7,500 a gallego commands—that bakers complain it doesn't come close to covering their costs. So they use new-found supplies of wheat in the country to bake every other kind of bread imaginable."

Say what you will about socialism, it always follows a predictable pattern. In an attempt to make something available to everyone, the socialists ensure that it is not available to anyone (except for the politically well-connected). As a child growing up behind the Iron Curtain, I recall constant shortages of basic foodstuffs. The price of meat, for instance, was kept artificially low due to political considerations. Low prices created an impression of affordability. On their trips abroad, communists would often boast that workers in the Soviet empire could buy and produce more meat than their Western counterparts. In reality, shops were often empty.

The deleterious consequences of price controls should not come as a surprise to anyone with a basic understanding of economics, including supply and demand, and the role that free markets play in allowing the price mechanism to function properly. Back in 1979, Robert Schuettinger of Oxford University and Eamonn Butler of the Adam Smith Institute wrote a brilliant series of essays entitled Forty Centuries of Wage and Price Controls: How Not to Fight Inflation.

The authors noted that price and wage controls go back, at the very least, 4,000 years to ancient Egypt. "For centuries the Egyptian government strived to maintain control of the grain crop, knowing that control of food is control of lives. Using the pretext of preventing famine, the government gradually regulated more and more of the granaries; regulation led to direction and finally to outright ownership; land became the property of the monarch and was rented from him by the agricultural class."

According to the French historian, Jean-Philippe Levy, "There was a whole army of inspectors [in Egypt]. There was nothing but inventories, censuses of men and animals … estimations of harvests to come... In villages, when farmers who were disgusted with all these vexations ran away, those who remained were responsible for absentees' production... [one of the first effects of harsh price controls on farm goods is the abandonment of farms and the consequent fall in the supplies of food]. The pressure [the inspectors] applied extended, in case of need, to cruelty and torture."

As Venezuelans can attest, the basic laws of economics have not changed since the time of Hammurabi. And, as they can also attest, neither have the means—cruelty and torture—by which governments attempt to make price controls work in real world.

This first appeared in Reason.
September 15, 2017
By Human Progress Team
Anti-inflammatory drug cuts heart attack risk 

A recent study of 10,000 patients indicates that using a new anti-inflammatory drug named Canakinumab can reduce the risk of repeat heart attacks by 15%. The outcome of the trial which the British Heart Foundation (BHF) dubbed “exciting and long-awaited” represents a “milestone in a long journey” according Harvard Medical school. The study is being described by its authors as representing potentially the most significant breakthrough in heart attack treatment since Statins, a drug which helps to lower cholesterol.  Despite this breakthrough, Canakinumab still has serious potential risks. The National Heart, Lung and Blood Institute has called for further research. 

Middle-class income hit highest level on record in 2016

Data from the U.S. Census Bureau shows that median household income reached a record high of $59,039 in 2016, increasing in real terms by 3.2% when compared to the 2015 median. This study is adjusted for inflation and includes data from almost 100,000 homes, making it one of the most of the most accurate and well regarded indices. The Census Bureau also found the number of people working full-time with increased earnings has increased by 2.2 million between 2015 and 2016, whilst the poverty rate has fallen 2.1% since 2014.

Trail raises Parkinson’s therapy hope 

A team of Japanese scientists have restored destroyed nerve cells caused by a disease similar to Parkinson’s, in the brains of macaque monkeys. By transplanting human stem cells to replace those destroyed, the monkeys have showed a substantial improvement after two years. The stem cells, which are known as induced pluripotent stem (iPS) cells are artificially created by reverting adult human cells into an embryonic-like state, meaning they can develop into a variety of different cell types. This treatment looks to reverse the release of dopamine by nerve cells, which occurs during Parkinson’s and typically results in severely impaired movement. The Japanese researchers are hoping to begin human trails by the end of 2018, but for now it is being described as “extremely promising research” as it proves “safe and highly effective cell therapy for Parkinson's can be produced in the lab.”

September 15, 2017
By Marian L. Tupy
Fifteen years ago, The Economist ran an article headlined "Better dead than GM-fed?" It focused on the refusal of some African countries to allow imports of American food aid, because it contained genetically modified organisms (GMOs). This was when extreme hunger threatened some 15 million people, before Africa's decade of economic growth spurred by high commodity prices as well as some economic reforms.

Some of the reasons for the refusal of U.S. food aid, such as Zambia's then-president Levy Mwanawasa's statement that GMOs were "poison," were just silly. American's have been eating GMO foods for decades and there is not an iota of evidence that GMOs are detrimental to health. Other reasons were more serious.

Much of Africa's agricultural produce is still destined for Europe and the European Union has been waging a war on GMO foods for decades. The reasons for the EU's anti-GMO stance, ostensibly, are health concerns. In reality, the EU is trying to protect its farmers against their more productive American competitors. Thus, were the U.S. food aid inadvertently to "contaminate" Africa's crops, Africans would be in trouble.

While imports of GMOs are not barred from Europe by law, the EU food labeling system obliges companies to indicate if the food or feed they produce contains GMOs. This labeling applies when GMOs account for at least 0.9 percent of the food or the feed. Since Europeans have been brainwashed into believing that GMO foods are unsafe, scary labeling could dampen European demand for African agricultural produce. As such, much of Africa has not only refused to grow GMOs, but also refused U.S. food aid.

Today, scholars can estimate the cost of Africa's refusal to grow GMO crops. According to a recent study in the journal PLoS One, delays in the introduction of disease-resistant cooking banana (matoke), insect-resistant cow pea, and corn (maize) "have resulted in significant economic and human health costs, including malnutrition and stunting."

"If Kenya had adopted GE [genetically engineered] corn in 2006," the study estimates, "between 440 and 4,000 lives could theoretically have been saved. Similarly, Uganda had the possibility in 2007 to introduce the black sigatoka resistant banana, thereby potentially saving between 500 and 5,500 lives over the past decade."

Each year of delay in the introduction of GMO crops to Africa increases the death count as well as revenue loss for African farmers. For example, insect-resistant Bt cowpea was supposed to become available to farmers in Benin, Niger and Nigeria this year. The authors of the study worry that anti-biotech activists could delay its introduction or postpone it indefinitely.

"A one-year delay in approval [of the insect-resistant Bt cowpea]," they estimate, "would especially harm Nigeria, as malnourishment is widespread there... [and] cost Nigeria about 33 million USD to 46 million USD and between 100 and 3,000 lives."

European restrictions on GMOs, the study argues, have serious costs. The same, however, goes for EU and U.S. agricultural subsidies, which undermine their African competitors and cost European and American taxpayers billions of dollars each year. I have a better idea. Let's keep our money and let African compete with us on an even playing field.

This first appeared in Reason.
September 15, 2017
By Marian L. Tupy
As 2017 enters its final months, leaders in the United Kingdom and in the United States wrestle with some momentous decisions. In Britain, Dr Liam Fox, the Secretary of State for International Trade, is beefing up his department with the intention of negotiating free trade agreements for the post-Brexit era, while Donald Trump, the American President, howls at his White House staff, “I want tariffs. And I want someone to bring me some tariffs.”

As our leaders set their sights on reconstituting British and American trade relations with the rest of the world, they should keep two dates – 1817 and 1917 – in mind.

Individuals have traded with one another, it is safe to assume, since before the birth of our species some 300,000 years ago. Long-distance trade between groups of peoples, historians estimate, goes back at least 150,000 years. But, it was only in 1776 that the Scottish founder of economics, Adam Smith, formulated the concept of absolute advantage as the basis for trade between countries.

“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished … but only left to find out the way in which it can be employed with the greatest advantage.”

But what if a country is the best at producing absolutely everything? What incentive does that country have to trade with others? Enter David Ricardo, another Briton. In 1817, which is to say exactly 200 years ago, Ricardo developed a theory of international trade that he called comparative advantage. According to Ricardo:

“If a country is relatively better at making wine than wool, it makes sense to put more resources into wine, and to export some of the wine to pay for imports of wool. This is even true if that country is the world’s best wool producer, since the country will have more of both wool and wine than it would have without trade. A country does not have to be best at anything to gain from trade. Because it is relative advantage that matters, it is meaningless to say a country has a comparative advantage in nothing.”

Yet, the concept of comparative advantage is little known outside of academia and it is subject to much misunderstanding. In fact, when the Nobel Prize-winning economist Paul Samuelson was once challenged to name “one proposition in all of the social sciences which is both true and non-trivial”, he quipped, “That [comparative advantage] is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.”

Fast forward to 1917, which is to say one hundred years after Ricardo’s monumental discovery. On November 7 of that year, a small band of Bolsheviks seized power in Russia and set the stage for one hundred years of struggle between capitalism, exemplified by free trade, and socialism, exemplified by autarky or self-sufficiency. (The struggle continues in Cuba, North Korea, Venezuela and other, less stark, examples, of anti-capitalist mentality.) So, what was the Bolsheviks’ big idea?

As I have explained in a previous column, Vladimir Lenin, the founder of the Soviet Union, believed that international trade was a tool of capitalist exploitation. “As capitalist economies mature, as capital accumulates, and as profit rates fall,” his followers believed, “the capitalist economies are compelled to seize colonies and create dependencies to serve as markets, investment outlets, and sources of food and raw materials.” To avoid being exploited, the Soviet Union would aim for self-sufficiency.Things did not work out the way that Lenin envisaged. As yet another great British economist and international trade specialist, Joan Robinson, of Cambridge University once observed (possibly with Lenin in mind), “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” During the second half of the 20th century, Hong Kong, which has become a byword for the policy of free trade, saw its wealth skyrocket. The autarkic Soviet Union stagnated and, eventually, collapsed.

The case for free trade is solid. Gregory Mankiw, professor of economics at Harvard University has noted that ″Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.” Liam Fox understands that. He has embraced the vision of international trade as outlined by Ricardo in 1817. Donald Trump, unfortunately, seems to see international trade as a means of exploitation of one country by another. He should heed the failures of 1917.

This first appeared in CapX.
September 01, 2017
By Marian L. Tupy
The question of the cost of living in the United States is intimately connected to the issue of the so-called “wage stagnation,” which is typically blamed on economic liberalization that started under President Carter, gathered steam under President Reagan, and peaked under President Clinton.

According to a 2015 report issued by the Economic Policy Institute, a pro-labor think tank based in Washington, D.C., “ever since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline. This is despite real GDP growth of 149 percent and net productivity growth of 64 percent over this period. In short, the potential has existed for ample, broad-based wage growth over the last three-and-a-half decades, but these economic gains have largely bypassed the vast majority.”

True, adjusted for inflation, average hourly earnings of production and nonsupervisory employees in the private sector (closest approximation for the quintessential blue-collar worker that I could find) have barely changed between 1979 and 2015. In October 1979, average hourly earnings stood at $6.51 or $21.20 in 2015 dollars. In October 2015, average hourly earnings stood at $21.18 – slightly below the inflation adjusted 1979 level.

Looking at the average hourly earnings, however, ignores at least three very important factors: expansion of non-wage benefits, fall in the price of consumer goods and rise in price of services, such as education and healthcare.

View the infographic here.

First, in recent decades, non-wage benefits expanded. Today they include relocation assistance, medical and prescription coverage, vision and dental coverage, health and dependent care flexible spending accounts, retirement benefit plans, group-term life and long term care insurance plans, legal and adoption assistance plans, child care and transportation benefits, vacation and sick paid time-off, and employee discount programs from a variety of vendors, etc.

It is not easy to put an exact figure on the value of those non-wage benefits, but they could amount to as much as 30 or even 40 percent of the workers’ earnings. The lion’s share of the non-wage benefits, as my Cato colleague Peter Van Doren wrote in 2011, is consumed by “the dramatic increase in health insurance costs.” “The fixed costs of health insurance,” Van Doren shows, “are a much larger percentage of the total compensation of lower-earnings workers.”

Second, many, perhaps most, big-ticket items used by a typical American family on a daily basis have decreased in price. Over at Human Progress, we have been comparing the prices of common household items as advertised in the 1979 Sears catalog and prices of common household items as sold by Walmart in 2015.

We have divided the 1979 nominal prices by 1979 average nominal hourly wages and 2015 nominal prices by 2015 average nominal hourly wages, to calculate the “time cost” of common household items in each year (i.e., the number of hours the average American would have to work to earn enough money to purchase various household items at the nominal prices). Thus, the “time cost” of a 13 Cu. Ft. refrigerator fell by 52 percent in terms of the hours of work required at the average hourly nominal wage, etc.

Needless to say, the above price reductions greatly underestimate the totality of welfare gains by an average American, by ignoring qualitative, aesthetic and environmental improvements on commonly used items. (To give just one example, a refrigerator today uses one-third of the electricity used by a refrigerator in the 1970s.)

From the above discussion it might be reasonable to conclude that Americans are much better off today than they were in the late 1970s, but that would be too simplistic. The cost of education, healthcare and housing has risen at a faster pace than total compensation. It is true that today’s houses are larger, healthcare better, and education more high-tech than in the past, but quality improvements do not seem to account for the entirety of price increases. For example, there appears to be a high degree of academic consensus that housing price inflation is driven, primarily, by zoning laws. (No such consensus, alas, exists for the rise in education and healthcare costs.)

The question of standard of living is a complex one. The accompanying infographic refers to merely one part of the debate, i.e., affordability of commonly used items. While we believe that the infographic tells an important story, it should be considered within a broader context, including non-wage compensation and offsetting increases in the cost of housing, education, and healthcare.
Observing the Stalinist propensity to rewrite people and events in and out of history, and to distort historical facts to suit the Communist Party’s goals, British author George Orwell once famously quipped that “Who controls the past controls the future: who controls the present controls the past.”

There are very few fully-fledged communist regimes left in the world today, but communist parties – unlike their National Socialist intellectual cousins – still form a part of many a governing coalition.

Since 1994, South Africa has been run by a tripartite coalition consisting of the South African Communist Party (SACP) and two movements, the Congress of South African Trade Unions (COSATU) and the African National Congress (ANC). The latter two have been gradually taken over by communists.

Over the past two decades, the South African comrades have been very busy rewriting the history of the struggle against apartheid. By trying to expunge liberal opposition to racial discrimination from the history books and monopolising the moral high ground in the fight for racial equality, the ANC hopes to secure a perpetual lock on power. Mercifully, a new book shines light on liberal efforts to bring about multi-racial democracy in South Africa, as well as the ongoing struggle to build a racially-blind and economically prosperous country.

John Kane-Berman’s memoir, Between Two Fires: Holding the Liberal Centre in South African Politics, which came out earlier this year, reflects on the career of one of the country’s preeminent writers, analysts and fighters for liberty.

As a gay man of (partly) Jewish heritage, Kane-Berman would have been at home on the far-left of South African politics. The National Party (NP), which ran South Africa between 1948 and 1994, was a movement inspired by Calvinist puritanism, while Jews were heavily over-represented in the leadership of the South African Communist Party.

Kane-Berman was not interested in identity politics. Instead, he spent his life searching for ways in which people of all colours and religions, as well as all personal and political preferences, could live alongside each other in peace and prosperity.

As such, he became a classical liberal, advocating for a free market economy and limited government, both of which were and are rejected by South Africa’s white and black nationalists – the two fires in the title of the memoir.

Kane-Berman was born in 1946 to a politically conscious family. His father, who loathed the NP and called its elected representatives “simply inhuman”, was the Chairman of the Torch Commando – an association of World War II veterans that attempted to prevent the NP from removing the Coloureds (mixed race South Africans) from the common voters’ roll in the Cape Province.

He was schooled at prestigious St John’s College in Houghton, a Johannesburg suburb represented for decades in the South African Parliament by the indomitable liberal MP Helen Suzman. He went to the University of the Witwatersrand, where, as a student leader, he led a protest against the government’s attempt to segregate racially-mixed English-speaking universities. He met Prime Minister, John Vorster, who berated Kane-Berman’s delegation as “little pink liberals.”

A Rhodes Scholarship and a stint at Oxford University followed. Always thirsty for knowledge, Kane-Berman joined both the Labour Club (to listen to Denis Healy) and the Conservative Association (to listen to Enoch Powell). He went to lectures by A.J.P. Taylor, A.J. Ayer and Isaiah Berlin, among others, and revelled in idyllic strolls though Magdalen College and Christ Church Meadows.

Kane-Berman’s academic career was cut short by the refusal of a vindictive NP officialdom to extend his passport, and so he returned to South Africa to rejoin the fight against apartheid in earnest. The year was 1971.

As a journalist for the Financial Mail, Kane-Berman wrote stories exposing the cruelties and absurdities of apartheid, and came close to being banished (i.e., prevented from exercising freedom of expression, travel and assembly) on a number of occasions.


It was during that time that he started developing his rather unconventional, if correct, view that South Africa’s expanding economy was a means towards racial integration. He saw that protection of white workers from black competition occasioned massive labor shortages. The government could either preside over economic stagnation or abandon workplace discrimination. The government chose the latter course and repealed the Colour Bar between 1973 and 1979.

New economic opportunities led to increased black urbanisation and enrichment. The wages of black South Africans skyrocketed (though they still lagging behind the white ones). Their new economic clout led to unionisation, which then snowballed into demands for political rights.

Far from exploiting the working class, as Communists and their fellow travellers maintained, capitalism had proved to be a catalyst to black emancipation. It is not for nothing that a succession of NP leaders roiled against “rootless capital” as a threat to white domination of South Africa.

Leaving a prodigious journalistic career behind, Kane-Berman took over as director of the South African Institute of Race Relations (SAIRR) in 1983. Established in 1929, SAIRR was the country’s most prestigious liberal institution, committed, in equal measure, to racial integration and free market economics.

Unfortunately, the Institute was almost broke and Kane-Berman had the unenviable task of nursing it back to financial health. Fundraising was difficult, because most foreign donors refused to fund South Africa’s NGOs without the ANC’s imprimatur. But whereas the ANC wanted to bring the NP down through a combination of economic sanctions and violent confrontations, SAIRR was committed to growth and negotiations.

In thousands of opinion pieces, hundreds of studies and dozens of books, SAIRR courageously exposed the insanity and immorality of apartheid, but the uneasy relationship between the ANC and the Institute would persist to the present.

Just as the ANC was suspicious of all forms of liberalism, SAIRR was skeptical of the fullness of the ANC’s conversion from a Stalinist movement committed to a one-party state and socialism, to a governing party at ease with free markets and a pluralistic society. That scepticism proved to be correct after the ANC’s assumption of power in 1994.

Over the last two decades, the ANC has gradually undermined checks and balances that were devised by the country’s 1996 Constitution. It has created a client support base that thrives on corruption and nepotism. And, after a few years when it took government and delivery of public services seriously, the ANC today seems committed to little else than self-enrichment and remaining in power through cynical exploitation of racial resentments. Throughout that time, SAIRR remained steadfast in speaking truth to power.

The ANC has long since given up on improving the lives of ordinary people. Instead, it has turned to propaganda, which lionises the ANC’s role in ending apartheid, while belittling the efforts of other black political parties, like Inkatha, and white liberals. Kane-Berman’s memoir is, therefore, a welcome contribution to the literature dealing with the history of South Africa in the second half of the 20th century and the first two decades of the new millennium.

In 2013, Kane-Berman stepped down as head of SAIRR, although he continues to write for a variety of South African outlets. He lives in Johannesburg with his partner of 45 years, Pierre Roestorf. Let us hope that his intellectual engagement with politics and economics in South Africa continues for many years to come.

This first appeared in CapX.
August 22, 2017
By Marian L. Tupy
August marks 70 years since the partition of the Indian sub-continent and the beginning of the slaughter that followed the creation of Hindu-majority India and Muslim-majority Pakistan. The anniversary occasioned much intellectual self-flagellation in the United Kingdom, even though, as Christopher Booker explains, the former colonial power did try to keep its old colony together.

In general, libertarians are not in favor of imposing Western values on people elsewhere, even though we happen to believe that political and economic freedoms are desirable and beneficial. That has long been the case. Adam Smith was an avid anti-imperialist who thought that empires were "a waste of money," while Richard Cobden thought that free trade and non-interventionism in foreign policy should go hand in hand.

"So far as our commerce is concerned," Niall Ferguson quotes from Cobden in his 2004 book Empire: How Britain Made the Modern World, "it can neither be sustained nor greatly injured abroad by force or violence. The foreign customers who visit our markets are not brought hither through fear of the power and the influence of British diplomatists; they are not captured by our fleets and armies; and as little are they attracted by feelings of love for us... It is solely from the promptings of self interest that the merchants of Europe, as of the rest of the world, send their ships to our ports to be freighted with the products of our labor."

Why rehash this seemingly ancient history? Because classical liberals and libertarians are not the only critics of imperialism. Communists and their fellow travelers, while ignoring the vast imperial domain that the Soviets built for themselves in Eastern Europe and Central Asia, have picked up the baton of anti-imperialism and used it, very effectively, to bludgeon the advocates of free markets as neo-imperialists. In fact, one of the biggest and most pernicious myths in the literature of economic development is that capitalism exploits the many, such as the colonies, while benefiting only the few, such as the colonial powers.

The origins of this myth go back to Karl Marx, who thought that, under capitalism, competition would drive down profits, thus necessitating greater exploitation of the workers. The mistaken theorizing of the German economist (real average global income per person rose by factor of 10 over the last 200 hundred years) was then updated by Vladimir Lenin in his immensely influential 1916 pamphlet, Imperialism, the Highest Stage of Capitalism.

The update was necessary because by Lenin's time, the workers in the western industrialized countries were unambiguously better off than when Marx wrote Das Capital (1867). And so, the first dictator of the Soviet Union invented a new thesis. Contra Marx, the living standards of the western workers continued to improve, Lenin argued, because of the riches that flowed to the West from the exploited colonies. Lenin's thesis had a profound effect on generations of Third World leaders, who rejected capitalism and embraced some form of socialism instead. To this day, most of the developing world remains less economically free than most of the West.

Colonialism and the developing world's reaction to it have led to much misery, but the West has not escaped its imperialist past unscathed. In his new book, The Strange Death of Europe: Immigration, Identity and Islam, the British writer Douglas Murray explains how colonial guilt undermines Western confidence and makes Westerners uneasy about the morality (i.e., justice) of the global distribution of wealth.

But, as Deirdre McCloskey shows in Bourgeois Dignity: Why Economics Can't Explain the Modern World, "colonial wealth accumulation" cannot, mathematically speaking, account for the 16-fold increase in the Western standards of living since the early 1800s. Similarly, the Nobel Prize-winning economist Angus Deaton and University of Maryland philosophy Professor Dan Moller, have shown that Western prosperity preceded Western imperial expansion (i.e., Western imperialism was an outcome of rising property in the West, rather than the reason for Western prosperity).

All in all, imperialism is a bad idea and we should have none of it. That said, imperialism does not and cannot explain either the roots or the extent of Western prosperity.

This first appeared in Reason.
August 21, 2017
By Chelsea Follett
It was strange seeing the picturesque college town where I attended graduate school appear on the news, transformed into a painful spectacle of angry tiki torch-bearing protesters and violence. In the aftermath of what happened last weekend in Charlottesville, it can be easy to feel as though the world is deteriorating into ever-greater brutality and chaos, and to lose hope.

There is reason for hope. Just look at the data.

Humanity has overcome far worse savagery before. Hard as it is to believe, empirically, violence has declined and this is in many ways the most peaceful era in history.

White supremacists are estimated to be only 0.02 percent of the U.S. population, hardly a dominant social movement. That is not to say that complacency is acceptable — violence has declined precisely because of the actions of individuals working towards greater peace and tolerance.

Amplifying the voice of the small number of white supremacists with wall-to-wall media coverage and lengthy profiles of the movement’s leaders, headed by glamorous photographs, is probably inadvisable.

The media’s tendency to highlight that which is rare and dramatic instead of long-term trends is one of the reasons that the public has such a distorted view of the world. Most people have no idea how much life has improved in the past few decades, for example.

The website HumanProgress.org, of which I am managing editor, aims to bridge the gap between widespread perceptions and reality by making data from reliable third-party sources more widely available.

Judging the state of the world by looking at empirical evidence, rather than by how grisly the headlines are, leads to surprisingly heartening conclusions.

International wars between nation states have almost disappeared. Homicides are becoming rarer globally, and despite a recent slight uptick, the U.S. homicide rate is still at an historic low point. Violence against women has declined in the United States, as has child abuse.

Despite the overall trend away from violence, it is important to note that progress is not linear nor inevitable, and that human action determines the course of the future.

Terrorism represents one of the few areas where violence has become worse, although it remains rare. On an average day, terrorists kill 21 people worldwide, while natural or technological disasters kill more than 100 times as many. Perspective is as important as vigilance against threats.

You are unlikely to die at the hands of an Islamist terrorist, and even less likely to be killed in a right-wing terrorist attack like the one that occurred in Charlottesville.

My colleague Alex Nowrasteh calculated the breakdown of deadly U.S. terrorist attacks by ideology and found that Islamists committed 92 percent of such murders, right-wing extremists committed 7 percent and left-wing terrorists were responsible for less than 1 percent (although that is increasing).

The threat of terrorism, whether by white supremacists, Islamists, or any other group, should be guarded against but not blown out of proportion. While honoring the victims of tragedies and taking care not to magnify the views of a few fanatics or overreact with policies that pointlessly restrict human liberty, we should take heart from the facts.

Although some violent extremists may stand opposed to the trend towards greater peace and tolerance, violence is slowly receding.

As Harvard University’s Steven Pinker put it: “For all the tribulations in our lives, for all the troubles that remain in the world, the decline of violence is an accomplishment we can savor, and an impetus to cherish the forces of civilization and enlightenment that made it possible.”

This first appeared in the Richmond Times Dispatch.
August 18, 2017
By Chelsea Follett
A new study shows that between 1850 and the present, radical changes in life expectancy, working conditions, real wages, education, and technology created a much more pleasant life for the average Dutch man. Between 1840 and 1950, the total amount of time that the average Dutch man spent working over the course of his life halved, despite an increase in life expectancy. Despite working less, male Dutch workers are much more productive than in the past. As working hours have declined, harmful effects of overwork such as productivity losses due to fatigue or accidents have also decreased. Along with a reduction in working hours, technology and education have allowed for productivity to skyrocket, despite the fact that people spend significantly less time working. Learn more by reading the full study here.


August 18, 2017
By Marian L. Tupy
I have just finished reading Neil Monnery’s new book, Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong. This fascinating account of the rise of Hong Kong as a global economic powerhouse is well written and, as such, easy to read and understand. I’m happy to recommend it wholeheartedly to CapX’s discerning readership.

I first became interested in the story of Hong Kong in the late 1990s. The emotional handover of the colony from the United Kingdom to China, for example, is deeply impressed on my memory. But also, as part of my doctoral research at the University of St Andrews, I read a number of essays about the rise of Hong Kong written by the Nobel Prize-winning economist Milton Friedman. Friedman, an advocate of the free market and small government, believed that individuals, when left unmolested, will strive to improve their lives and those of their families. Prosperity will follow.

His was similar to Adam Smith’s insight:


“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavor to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”

No country in modern history has come as close to Smith’s ideal as Hong Kong. The territory that the British Foreign Secretary Viscount Palmerston described as “a barren island with hardly a house upon it” was once very poor. In the immediate aftermath of World War II and Japanese occupation, its per capita income was about a third of that in the United Kingdom.


By the time British colonial rule ended, Hong Kong was 10 per cent richer than the mother country. Last year, the former colony was 37 per cent richer than the UK. It is, therefore, apposite that the man credited with Hong Kong’s success should be a Scottish civil servant, a University of St Andrews alumnus, and a devotee of Adam Smith: Sir John Cowperthwaite.

As Monnery explains, Cowperthwaite was not the first small government advocate to oversee the colony’s economy and finances. A succession of colonial governors and their financial secretaries ran a shoe string government. But, they did so out of financial necessity, rather than deep ideological commitment to small government.

As Financial Secretaries, Geoffrey Fellows (1945-1951) and Arthur Clarke (1951-1961) established a regime of low taxes and budgetary surpluses, and free flow of good and capital. To those foundations, Cowperthwaite (1961-1971) added not only the vigor of his convictions, but also a handpicked successor, Philip Haddon-Cave (1971-1981). By the time Haddon-Cave departed, the success of Hong Kong’s experiment with small government was undeniable not only to the British, but also to the Chinese. Margaret Thatcher embarked on her journey to dismantle British socialism in 1979, while Deng Xiaoping started undoing the damage caused by Chinese communism in 1978.

And that brings me to the most important reason why Cowperthwaite, rather than Fellows and Clarke, deserve to be credited with the rise of Hong Kong. Basically, he was the right man at the right place in the right time – the 1960s. It was all well and good to run a small government when the colony was still poor. By the 1960s, however, the colony was prospering and demands for higher government spending (as a proportion of GDP) were increasing. As an aside, the government’s nominal spending increased each year in tandem with economic growth. To make matters much worse, socialism, be it in its Soviet form (i.e., central planning) or in its more benign British form (state ownership of the commanding heights of the economy) was ascendant.

In fact, just before departing from Hong Kong, Clarke appears to have had a sudden crisis of confidence in the colony’s economic model, noting:

“We have, I think, come to a turning point in our financial history … There seem to be two courses we can follow. We can carry on as we are doing … Or we can do something to plan our economy … Which course should we adopt?”

Mercifully, Cowperthwaite was able to articulate the reasons for staying the course. In his early budget debates, he noted:

“I now come to the more general and far-reaching suggestion made by Mr Barton and Mr Knowles, that is, the need to plan our economic future and in particular, the desirability of a five-year plan. I would like to say a few words about some of the principles involved in the question of planning the overall economic development of the colony.

“I must, I am afraid, begin by expressing my deep-seated dislike and distrust of anything of this sort in Hong Kong. Official opposition to overall economic planning and planning controls has been characterised 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 may not do; and no matter how it may be dressed up that is what planning is.”
And:
“An economy can be planned, I will not say how effectively, when there unused resources and a finite, captive, domestic market, that is, when there is a possibility of control of both production and consumption, of both supply and demand. These are not our circumstances; control of these factors lies outside our borders. For us a multiplicity of individual decisions by businessmen and industrialists will still, I am convinced, produce a better and wiser result than a single decision by a Government or by a board with its inevitably limited knowledge of the myriad factors involved, and its inflexibility.
“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.”

It is not clear whether Cowperthwaite ever read Friedrich Hayek’s 1945 essay, “The Use of Knowledge in Society”, which posits that allocation “of scarce resources requires knowledge dispersed among many people, with no individual or group of experts capable of acquiring it all”, or whether he came to the same conclusions as the Austrian Nobel Prize-winning economist on his own. But, even if he were consciously or sub-consciously influenced by Hayek, it speaks much of Cowperthwaite “the thinker” that he took Hayek’s insights to heart, unlike so many decision-makers around the world, who succumbed to the Siren calls of socialism.

And so it was with considerable amazement that, towards the end of my first year at St Andrews, I discovered Cowperthwaite and I were neighbors. His house on 25 South Street was a few hundred feet away from Deans Court, the University’s post-graduate student residence. I immediately wrote to him and he responded, asking me to come for tea. I spent a wonderful afternoon in his presence and kept in touch with him during my remaining time at St Andrews.

Last time I saw him, he came to the launch of the libertarian student magazine Catallaxy, which my friend, Alex Singleton, and I wrote together. As he took his leave, I saw him walk down Market Street and got a distinct feeling that it would be for the last time. Shortly after I graduated and moved to Washington. A new life and new job took precedence and St Andrews slowly receded down memory lane.


Neil Monnery’s book made those wonderful memories come alive again. His work has immortalized a man to whom so many owe so much. Architect of Prosperity is an economic and intellectual history. Above all, it is a tribute to a principled, self-effacing, consequential and deeply moral man. Monnery deserves our gratitude for writing it.



August 16, 2017
By Marian L. Tupy
Over the last few months, The New York Times has published a number of warm and nostalgic recollections of communism. Authors have opined about the supposed optimism, idealism, and moral authority of communism. Perhaps the most bizarre article so far claimed that women behind the Iron Curtain enjoyed greater sexual satisfaction and more independence than their Western counterparts (except, of course, when it came to freedom of thought, speech, religion, association, or movement).

I would have chosen to commemorate 100 years since the Bolshevik Revolution and the birth of the Soviet Union in a different way. Over 100,000,000 people have died or were killed while building socialism during the course of the 20th century. Call me crazy, but that staggering number of victims of communism seems to me more important than the somewhat dubious claim that Bulgarian comrades enjoyed more orgasms than women in the West. But as one Russian babushka said to another, suum cuique pulchrum est.

I am, however, intrigued by the striking similarities between the Times articles. To the greatest extent possible, they seem to avoid the broader perspective on life under communism (i.e., widespread oppression and economic failure). Instead, they focus on the experiences of individual people, some of whom never lived in communist countries in the first place.

In "When Communism Inspired Americans," the author remembers her socialist parents and the life of the communist sympathizers in 1950s America. In "Thanks to Mom, the Marxist Revolutionary," the author remembers his batty mother, who dragged him from one communist hellhole to another in search of a "real world" experience. In "'Make It So': 'Star Trek' and Its Debt to Revolutionary Socialism," the author quotes Captain Picard, who explains to a cryogenically unfrozen businessman from the 20th century, "People are no longer obsessed with the accumulation of things. We've eliminated hunger, want, the need for possessions. We've grown out of our infancy."

Speaking of hunger and infancy, here are some completely gratuitous eyewitness accounts of parents eating their own children during the man-made famine in Ukraine in the 1930s. Communism may have influenced science fiction writers, but real life in the USSR was no picnic.

"Where did all bread disappear, I do not really know, maybe they have taken it all abroad. The authorities have confiscated it, removed from the villages, loaded grain into the railway coaches and took it away someplace. They have searched the houses, taken away everything to the smallest thing. All the vegetable gardens, all the cellars were raked out and everything was taken away. Wealthy peasants were exiled into Siberia even before Holodomor during the 'collectivization.' Communists came, collected everything....People were laying everywhere as dead flies. The stench was awful. Many of our neighbors and acquaintances from our street died....Some were eating their own children. I would have never been able to eat my child. One of our neighbors came home when her husband, suffering from severe starvation, ate their own baby daughter. This woman went crazy."

One has to wait until "Why Women Had Better Sex Under Socialism," to meet an actual Eastern European. "Consider Ana Durcheva from Bulgaria," the author writes, "who was 65 when I first met her in 2011. Having lived her first 43 years under Communism, she often complained that the new free market hindered Bulgarians' ability to develop healthy amorous relationships. 'Sure, some things were bad during that time, but my life was full of romance.'" Durcheva's daughter, in contrast, works too much, "and when she comes home at night she is too tired to be with her husband."

What are we to make of this? Are we merely to deduce that the life of a young and, apparently, attractive woman behind the Iron Curtain was not completely devoid of pleasure? No. The article is explicit in stating that "communist women enjoyed a degree of self-sufficiency that few Western women could have imagined."

This is unadulterated rubbish. I grew up under communism, and here is what I recall.

First, all communist countries were run by men; female leaders, like Margaret Thatcher and Golda Meir, would have been unthinkable. Women who rose to prominence, like Raisa Gorbachev and Elena Ceausescu, did so purely as appendages of their powerful husbands.

Second, the author concedes that "gender wage disparities and labor segregation persisted, and...the communists never fully reformed domestic patriarchy." I would say so. In a typical Eastern European family, the woman, in addition to having a day job at a factory, was expected to clean the apartment, shop for food, cook dinner, and raise the children. The Western sexual revolution passed the communist bloc by, and ex-communist countries remain much more patriarchal than their Western counterparts to this day.

Third, communist societies were socially uber-conservative. As such, pornography and prostitution were strictly prohibited, divorces were discouraged and divorced people ostracized, and prophylactics and the pill were hard to obtain. (Think about it for one hot second. Why would economies unable to produce enough bread and toilet paper generate a plentiful and regular supply of condoms? This makes no sense!) The reason why we refer to communist countries as "totalitarian" is because the state wanted to control every aspect of human existence. Sexual autonomy was, well, autonomous. Being outside the control of the all-powerful state, it was treated with suspicion and suppressed.

But don't take my word for it. You can still visit a few communist countries, including Cuba and North Korea, and compare the social status and empowerment of their women with those in the West. Had the esteemed editors of the Times done so, they would have, I hope, thought twice about publishing a series of pro-communist excreta.

August 04, 2017
By Chelsea Follett
Heat and Cold Provide Energy Storage Solution

Alphabet INC, the parent company of Google, is pitching the idea of using molten salt and cold liquid to store renewable energy. Existing solutions for energy storage all have disadvantages, including high price tags and low efficiency. The research lab suggests the thermal-energy system in salt could be durable, flexible and cheap. This system functions by converting electrical power from solar panels or wind turbines into thermal energy, which is then divided and stored in tanks of molten salt or cold liquid. The heat and cold can later be used to generate the wind for electricity production. Academics agree that the proposed system is technically viable. If successful, this system would help renewable energy, which is hindered by its instability and a lack of storage options, to become more cost-effective.

Gene-Editing Could Prevent Diabetes

Researchers from the University of Chicago recently made a medical breakthrough in treating diabetes by the new and highly precise gene-editing technique CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats). The research team modified the gene for G1P1, the hormone responsible for stimulating insulin production, to make the hormone’s half-life longer. Then they attached an inducible promoter, which acts as a switch for GLP1 production. The modified gene is inserted into lab-grown skin cells and then transplanted into mice. There have been no significant side effects observed. Although this experiment targets diabetes, such skin transplants could be a potential cure for many diseases associated with genetic defects, such as hemophilia.   

Data Storage Breakthrough Announced

Another technological breakthrough was made in data storage. Sony and IBM just jointly announced “a twenty-fold increase in the areal density of magnetic tape storage.” The demand for high-capacity data storage has sky-rocketed due to recent developments in areas such as the internet of things, big data and cloud computing. Given concerns about cost, resilience, and capacity, magnetic tapes are considered an important archival format. With a combination of technologies from IBM and Sony, the new tapes will be able to hold 330TB of data, and will be commercialized soon.