But I also make a point to regularly read non-libertarians such as Desmond Lachman, Will Wilkinson, Dalibor Rohac, and Noah Smith even though I sometimes – or even often – disagree with their policy prescriptions.
What matters is that they generally have intelligent and thoughtful observations on issues that I care about.
But they’re not necessarily accurate. For instance, Noah Smith recently wrote an interesting column for Bloomberg about whether people are poor because of their own behavior or because of external factors.
Here are the passages that caught my attention.
…there is at least one rich country where people…work hard, avoid risky, self-destructive behavior and make wise life choices. That country is Japan. And it still has plenty of poverty. …Given all of this good behavior, conservatives might expect that Japan’s poverty rate would be very low. But the opposite is true; Japan has a relatively high number of poor people for an advanced country. Defined by the percentage of the population earning less than half of the median national income, Japan’s poverty rate is more than 15% — a little lower than the U.S., but considerably higher than countries such as Germany, Canada or Australia… This suggests that there is something very wrong with the conservative theory of poverty.
Fortunately, I don’t need to explain what’s wrong with Smith’s analysis.
Writing for National Review, Kevin Williamson has already pointed out his errors.
Smith here relies on a useless measure of “relative” poverty, the share of the population earning less than half of the median income. You can see the limitations of that approach: A uniformly poor society in which 99 percent of the people live on 50 cents a day and 1 percent live on 49 cents a day would have a poverty rate of 0.00; a rich society with incomes that are rising across-the-board but are rising much more quickly for the top two-thirds would have a rising poverty rate… It would be far better to consider poverty in absolute terms, but our progressive friends are strangely resistant to that.
It is indeed strange that so many folks on the left have decided to use an artificial and misleading definition of poverty. One that depends on the distribution of income rather than any specific measure of poverty.
Which is insanely dishonest. It means that everyone’s income could double and the supposed rate of poverty would stay the same.
No wonder the practitioners of this approach often produce absurd data, such as the OECD’s assertion that there’s more poverty in the United States than in basket case economies such as Greece and Italy.
Shame on Noah Smith. He should know better.
I’ll continue to read his work, so he’s not being kicked out of my club of non-libertarian writers.
And we have good evidence for this approach, as I explain in this FreedomWorks discussion.
I also discuss tax competition in the interview, as well as other topics. You can watch the entire discussion by clicking here.
But I’m sharing the part about spending caps because it fits perfectly with some new research from Veronique de Rugy and Jack Salmon of the Mercatus Center.
They point out that America faces a grim fiscal future, but suggest that fiscal rules may be part of the solution.
…the federal budget process as it exists today has proven inadequate…it is a great way to enable politicians to do what they want to do (cater to interest groups) while avoiding what they don’t want to do (living within their means). …The negative consequence emerging from this chaos and the resulting failure to follow budget rules is an unremitting expansion of the size and scope of government… With countries around the world experiencing growing debt-to-GDP ratios, resultant stagnation in economic growth, and, in extreme cases, default on debts, academics have been paying an increasing amount of attention to the potential of rules toward restraining unsustainable deficit spending. …The good news is that the evidence suggests that these fiscal rules are broadly effective at restraining deficit spending. …The bad news is that not all fiscal rules are effective in restraining government profligacy and curtailing debt growth.
The authors are right. Some fiscal rules don’t work very well.
Spending caps, by contrast, have a decent track record.
The Mercatus study looks at Hong Kong.
Hong Kong…might actually represent the gold standard of good fiscal policy. …Hong Kong’s Financial Secretary, Mr. John Tsang, explained, “Our commitment to small government demands strong fiscal discipline. . . . It is my responsibility to keep expenditure growth commensurate with growth in our GDP.” …in Hong Kong it’s actually a constitutional requirement: Article 107 requires that the government should strive to achieve a fiscal balance, avoid deficit, and more importantly, make sure government spending doesn’t grow faster than the growth of the economy. …Hong Kong’s spending-to-GDP ratio has fluctuated between 14 and 20 percent since the 1990s, its debt as a share of GDP is zero, social welfare spending remains steady at less than 3 percent of GDP.
Now let’s look at what the authors wrote about Switzerland.
Swiss politicians are not allowed to increase spending faster than average revenue growth over a multiyear period (as calculated by the Swiss Federal Department of Finance), which confines spending growth to a rate no higher than the rate of inflation plus population growth. The Swiss debt brake rule is significant in that it appeals to economists and policymakers on both sides of the aisle. Advocates for fiscal restraint support this rule because it is effectively a spending cap, while social democrats support the rule as it allows for deficit spending during recessionary periods. …There’s no arguing with the results: Annual spending growth fell from an average of 4.3 percent to 2.5 percent since the rule was implemented. Also, in 10 out of the past 14 years, Switzerland has had budget surpluses, while deficits have remained rare and small… At the same time, the Swiss debt-to-GDP ratio has fallen from almost 60 percent in 2003 to around 42 percent in 2017.
Here’s Figure 1 from the study, which shows a big drop in Swiss government debt. I’ve augmented the chart with OECD data to focus on something even more important – which is that the burden of spending (which started very low by European standards) has declined since the debt brake was implemented.
Last but not least, let’s look at the Danish example.
In 2014 Denmark implemented The Budget Act to ensure more efficient management of public expenditures. The act is aimed at ensuring a balance or surplus on the general government balance sheet, as well as appropriate expenditure management at all levels of government. In practice, the rule sets a limit of 0.5 percent of GDP on the structural budget deficit. Policymakers decided that managing fiscal policy on the basis of a balanced structural budget would lead to an appropriate fiscal position in the long term. They also designed the system to take discretion out of their own hands by making the cuts automatic. In addition to structural deficit rules, the Budget Act introduces four-year rolling expenditure ceilings. These ceilings set legally binding limits for spending at all levels of government and for each program. If one program spends under its cap, any money not spent cannot be reallocated to another program.
I guess this is time for a triple-amen.
Here’s Figure 2 from the study, which I’ve also augmented to highlight the most important success of Denmark’s policy of spending restraint.
The economic case for spending caps is ironclad.
The problem is that it’s an uphill climb from a political perspective.
Politicians prefer legislative spending caps. After all (as we saw in 2013, 2015, 2018, and this year), those can be evaded with a simple majority, so long as there’s a profligate president who approves higher spending levels.
My collection of liberals who are honest on the issue of gun control is expanding.
In 2012, I shared some important observations from Jeffrey Goldberg, a left-leaning writer for The Atlantic. In his column, he basically admitted his side was wrong about gun control.
Then, in 2013, I wrote about a column by Justin Cronin in the New York Times. He self-identified as a liberal, but explained how real-world events have led him to become a supporter of private gun ownership.
In 2015, I shared a column by Jamelle Bouie in Slate, who addressed the left’s fixation on trying to ban so-called assault weapons and explains that such policies are meaningless.
Most recently, in 2017, Leah Libresco wrote in the Washington Post that advocates of gun control are driven by emotion rather empirical research and evidence.
Now we have another addition to the list.
Alex Kingsbury of the New York Times acknowledges that politicians who want to ban so-called assault weapons are engaging in a futile exercise.
There are currently around 15 million military-style rifles in civilian hands in the United States. …Acknowledging the grim reality that we will live among these guns indefinitely is a necessary first step…calling for military-style rifles bans — as I have done for years — may be making other lifesaving gun laws harder to pass. …Short of forced confiscation or a major cultural shift, our great-great-great-grandchildren will live side-by-side with the guns we have today and make tomorrow. …For context: In 2016 alone, more than one million military-style weapons were added to America’s existing civilian arsenal… America’s gun problem is far larger than military-style weapons, the mass killer’s rifle of choice. There are hundreds of millions of handguns in the country… The guns…are here to stay.
Interestingly, he acknowledges that civil disobedience is widespread, which I wrote about last month.
Not only is confiscation politically untenable — the compliance rates of gun owners when bans are passed are laughably low. The distribution of these weapons across society makes even their prohibition nearly impossible. In 1996, Australia launched a mandatory gun buyback of 650,000 military-style weapons. While gun ownership per capita in the country declined by more than 20 percent, today Australians own more guns than they did before the buyback.
The only way to cut the half-life of guns is to convince Americans that they’re safer without them. Yet with violent crime at historic lows and Americans still buying up semiautomatic rifles by the bushel.
Since we’re writing about the left and guns, let’s look at a Washington Timesreport about an unusual response to a gun ban in Boulder, Colorado.
Boulder’s newly enacted “assault weapons” ban is meeting with stiff resistance from its “gun-toting hippies,” staunch liberals who also happen to be devoted firearms owners. Only 342 “assault weapons,” or semiautomatic rifles, were certified by Boulder police before the Dec. 31 deadline, meaning there could be thousands of residents in the scenic university town of 107,000 in violation of the sweeping gun-control ordinance. …Current owners were given until the end of the year to choose one of two options: Get rid of their semiautomatics by moving them out of town, disabling them, or turning them over to police — or apply for a certificate with the Boulder Police Department… Judging by the numbers, however, most Boulder firearms owners have chosen to do none of the above, albeit quietly. …“The firearms community in Boulder — they may be Democrats but they love their firearms,” said Ms. Hollywood, herself a former Boulder resident.
Kudos to these citizens.
By the way, I also want to share this blurb from the story.
City Attorney Tom Carr has acknowledged that enforcing the ordinance will be a challenge, telling the Boulder Daily Camera that “there’s no circumstance where we go door-to-door and ask people if they’ve violated the law.”
Reminds me of the great video from Reason about the utter impracticality of actually trying to impose a gun ban.
Let’s close with some excerpts from a story in the Washington Free-Beacon.
They may not like Trump & McConnell but they love Smith & Wesson. …members of the Liberal Gun Club…traveled around central Florida shooting sporting clays, steel challenge matches, and even a few machineguns while planning how they’ll expand the club and use it to lobby against new gun bans… They were welcoming and friendly. They’re definitely liberals and they’re definitely gun lovers. …Pattie Hall, a member from rural Kentucky… “I wanted to be able to find other people who think like I do… I’m a very unusual shooter in the sense that you don’t find many liberals, many lesbians, or many vegetarians, and I’m all of those, but I still like guns.” …Pattie, Sean, and Keith all said they’d faced more backlash from the average liberal who found out they owned guns than from gun owners who found out they were liberals. In Pattie’s case, she said gun owners tended to be far more tolerant of her being gay than liberals are of her being a gun owner. …the club is hoping to show liberal gun owners are out there, they don’t want their guns taken away, and there are more of them than you probably think.
I guess all of these people should be honorary members of the honest liberals club.
Sadly, they’re presumably just a tiny minority of folks on the left.
Though hopefully they can act as missionaries and gain more converts.
You would think, for instance, that decent people on the left would look at the unsavory history of gun control – especially the way it was used to deny civil rights to minorities – and put individual rights ahead of government power.
Or that they would look at how various tyrants have disarmed their populations before launching genocides, and understand the value of an armed citizenry.
Heck, maybe they can look at the inverse relationship between crime and gun ownership over the past few decades and draw the logical conclusion.
Though if they were wise enough to recognize all these points, they’d presumably be libertarians!
Having been inspired by Ronald Reagan’s libertarian-ish message (and track record), I’ve always been suspicious of alternative forms of conservatism for the simple reason that they always seem to mean bigger government.
To be fair, proponents of all these approaches always paid homage to the role of markets, so we’re not talking about Bernie Sanders-type nuttiness.
But I don’t want to travel in the wrong direction, even if only at 10 miles-per-hour rather than 90 miles-per-hour.
Now there’s a new alternative to Reaganism called “national conservatism.” It’s loosely defined, as you can see by reports from both left-leaning outlets (New York, New Republic) and right-leaning outlets (Townhall, Daily Signal).
There are parts of this new movement that are appealing, at least if I’m reading them correctly. Proponents are appropriately skeptical of global governance, though maybe not for the reasons that arouse my antipathy. But the enemy of my enemy is my friend in this battle.
They also don’t seem very fond of nation building, which also pleases me. And I also am somewhat sympathetic to their arguments about national unity – assuming it’s based on the proper definition of patriotism.
But their economic views, at best, are worrisome. And, as George Will opines, they’re sometimes awful.
…“national conservatives”…advocate unprecedented expansion of government to purge America of excessive respect for market forces and to affirm robust confidence in government as a social engineer allocating wealth and opportunity. …The Manhattan Institute’s Oren Cass advocates “industrial policy” — what other socialists call “economic planning”… He especially means subsidizing manufacturing..he admits that as government, i.e., politics, permeates the economy on manufacturing’s behalf, “regulatory capture,” other forms of corruption and “market distortions will emerge.” Emerge? Using government to create market distortions is national conservatism’s agenda. …Their agenda is much more ambitious than President Richard M. Nixon’s 1971 imposition of wage and price controls, which were temporary fiascos. Their agenda is even more ambitious than the New Deal’s cartelization of industries, which had the temporary (and unachieved) purpose of curing unemployment. What national conservatives propose is government fine-tuning the economy’s composition and making sure resources are “well” distributed, as the government (i.e., the political class) decides, forever. …Although the national conservatives’ anti-capitalism purports to be populist, it would further empower the administrative state’s faux aristocracy of administrators who would decide which communities and economic sectors should receive “well”-allocated resources. Furthermore, national conservatism is paternalistic populism. This might seem oxymoronic, but so did “Elizabeth Warren conservatives” until national conservatives emerged as such.
Since Nixon and FDR were two of America’s worst presidents, Will is drawing a very harsh comparison.
To give the other side, here are excerpts from a New York Timescolumn by Oren Cass.
…a labor market in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy. Genuine prosperity depends upon people working as productive contributors to their society, through which they can achieve self-sufficiency, support their families, participate in their communities, and raise children prepared to do the same.
None of this sounds bad.
Heck, it sounds good. I’m in favor of strong families and strong communities.
But what does this rhetoric mean? Here’s where I start to worry.
Crucially, while a labor market left alone will seek an efficient equilibrium, economic theory never promises that the equilibrium will be a socially desirable, inclusive one. A genuine conservatism values markets as powerful mechanisms that foster choice, promote competition and deliver growth, but always in service to the larger end of a cohesive society in which people can thrive. …In some cases, …conservatives will head in new directions or even reverse course. …an insistence that workers throughout the labor market share in productivity growth……longstanding hostility toward organized labor will give way to an emphasis on reform. …new forms of organizing through which workers can support one another, engage with management and contribute to civil society should be a conservative priority.
And my worry turns to unfettered angst when I read some of the specific ideas that Cass mentions.
…a wage subsidy delivered directly into each low-wage paycheck…skepticism of unfettered international trade…legislation that would require the Federal Reserve to close the trade deficit by taxing foreign purchases of American assets.
I’ll close with a political observation. Defenders of national conservatism have told me that the Reagan message is old and stale. It supposedly doesn’t apply to new problems in a new era.
Yet non-conservative Republicans lost twice to Obama while a hypothetical poll in 2013 showed Reagan would trounce Obama.
Some national conservatives point to Trump’s victory as an alternative, but I think that had more to do with Hillary Clinton. In any event, I very much doubt Trumpism is a long-term model for political success. Or economic success.
Back in 2012, I wrote that the left’s hostility to tax competition had reached such a crazy level that some of them were even urging military action against low-tax jurisdictions.
Though I was amused to see that this warmongering focused on tiny jurisdictions such as Monaco and the Cayman Islands rather than the well-armed Swiss.
But maybe the militaristic statists are getting braver.
Stephen Walt, a professor at Harvard, openly suggests in a column for Foreign Policy that it may be necessary to invade Brazil in the name of global warming.
…how far would you go to prevent irreversible environmental damage? In particular, do states have the right—or even the obligation—to intervene in a foreign country in order to prevent it from causing irreversible and possibly catastrophic harm to the environment? …I raise this issue in light of the news that Brazilian President Jair Bolsonaro is accelerating development of the Amazon rainforest… What should (or must) the international community do to prevent a misguided Brazilian president (or political leaders in other countries) from taking actions that could harm all of us?
In the article, Professor Walt mentions sanctions and protectionism as potential tools.
But he also thinks a military option should be on the table.
…international law authorizes countries to go to war for self-defense or when the Security Council authorizes military action. It’s even legal to attack another country’s territory preemptively, provided there is a well-founded basis…destroying the Amazon rainforest presents a clear and obvious threat to many other countries… I don’t mean to single out Brazil: It would be an equally radical step to threaten the United States or China if they refused to stop emitting so many greenhouse gases. …It might seem far-fetched to imagine states threatening military action to prevent this today, but it becomes more likely if worst-case estimates of our climate future turn out to be correct.
Wow.
Because I’m not a scientist, I generally don’t write about global warming. Or climate change, or climate crisis, or whatever it’s now being called.
At the risk of over-simplifying, the difference between “supply-side economics” and “demand-side economics” is that the former is based on microeconomics (incentives, price theory) while the latter is based on macroeconomics (aggregate demand, Keynesianism).
When discussing the incentive-driven supply-side approach, I often focus on two key points.
Marginal tax rates matter more than average tax rates because the incentive to earn additional income (rather than enjoying leisure) is determined by whether the government grabs a small, medium, or large share of any extra earnings.
Some taxpayers such as investors, entrepreneurs, and business owners are especially sensitive to changes in marginal tax rates because they have considerable control over the timing, level, and composition of their income.
Today, let’s review some new research from Spain’s central bank confirms these supply-side insights.
Here’s what the authors investigated.
The impact of personal income taxes on the economic decisions of individuals is a key empirical question with important implications for the optimal design of tax policy. …the modern public finance literature has devoted significant efforts to study behavioral responses to changes in taxes on reported taxable income… Most of this work focuses on the elasticity of taxable income (ETI), which captures a broad set of real and reporting behavioral responses to taxation. Indeed, reported taxable income reflects not only individuals’ decisions on hours worked, but also work effort and career choices as well as the results of investment and entrepreneurship activities. Besides these real responses, the ETI also captures tax evasion and avoidance decisions of individuals to reduce their tax bill.
By the way, “elasticity” is econ-speak for sensitivity. In other words, if there’s high elasticity, it means taxpayers are very responsive to a change in tax rates.
Anyhow, here’s how authors designed their study.
In this paper, we estimate the elasticity of taxable income in Spain, an interesting country to study because during the last two decades it has implemented several major personal income tax reforms… In the empirical analysis, we use an administrative panel dataset of income tax returns… We calculate the MTR as a weighted average of the MTR applicable to each income source (labor, financial capital, real-estate capital, business income and capital gains).
You can see in Figure 1 that the 2003 reform was good for taxpayers and the 2012 reform was bad for taxpayers.
If nothing else, though, these changes created the opportunity for scholars to measure how taxpayers respond.
And here are the results.
We obtain estimates of the ETI around 0.35 using the Gruberand Saez (2002) estimation method, 0.54 using Kleven and Schultz (2014)’s method and 0.64 using Weber (2014)’s method. …In addition to the average estimates of the ETI, we analyze heterogeneous responses across groups of taxpayers and sources of income. …As expected, stronger responses are documented for groups of taxpayers with higher ability to respond. In particular, self-employed taxpayers have a higher ETI than wage employees, while real-estate capital and business income respond more strongly than labor income. …we find large responses on the tax deductions margin, especially private pension contributions.
In other words, taxpayers do respond to changes in tax policy.
And some taxpayers are very sensitive (high elasticity) to those changes.
Here’s Table 6 from the study. Much of it will be incomprehensible if you’re not familiar with econometrics. But all that matters is that I circled (in red) the measures of how elasticities vary based on the type of income (larger numbers mean more sensitive).
I’ll close with a very relevant observation about American fiscal policy.
But what if the United States had a large-sized welfare state, like the ones that burden many European nations?
If you review the data, those large-sized welfare states are financed with stifling tax burdens on lower-income and middle-class taxpayers. Politicians in Europe learned that they couldn’t squeeze enough money out of the rich (in large part because of high elasticities).
Indeed, I wrote early this year about how taxes are confiscating the lion’s share of the income earned by ordinary workers in Spain.
For libertarians, there aren’t many good role models in the world. There are a few small jurisdictions such as Bermuda, Monaco, and the Cayman Islands that are worth highlighting because of strong rule of law and good fiscal policy. There are also a few medium-sized nations that are – by modern standards – very market-oriented, such as Switzerland, Singapore, and New Zealand.
But Hong Kong generally gets top rankings for economic liberty. Which helps to explain why I’m so worried about a potential crackdown by China.
As I noted in the interview, intervention by Chinese security would not be good news for Hong Kong.
But it also would be bad news for China’s economy. Especially since it already is dealing with the adverse consequences of both internal statism and external protectionism.
Indeed, the only reason I’m not totally pessimistic is that the power elite in China doubtlessly would experience a big loss in personal wealth if there is a crackdown.
That being said, I can’t imagine President Xi will allow China’s implicit control over Hong Kong to diminish. So I’m reluctant to make any prediction.
But I very much hope that Hong Kong will emerge unscathed, in part because I don’t want to lose a very good example of the link between economic liberty and national prosperity.
Marian Tupy, writing for CapX, explains that Hong Kong is a great role model.
In 1950, …compared to the advanced countries of the West, Hong Kong was still a relative backwater. …the average resident of the colony earned 35 per cent and 25 per cent compared to British and American citizens respectively. Today, average income in Hong Kong is 37 per cent and 3 per cent higher than that in the United Kingdom and America. …Unlike some British ex-colonies and the United Kingdom itself, Hong Kong never experimented with socialism. Historically, the government played only a minor role in the economy… The territory kept taxes flat and low… The territory followed a policy of unilateral trade liberalisation, which is to say that the colony allowed other countries to export to Hong Kong tariff-free, regardless of whether other countries reciprocated or not. …In 1755, the great Scottish economist Adam Smith…wrote, “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…” Hong Kong prospered because it followed Smith’s recommendations.
Here’s his chart showing how Hong Kong has surpassed both the United Kingdom and United States in terms of per-capita economic output.
In a column for the Wall Street Journal, Jairaj Devadiga explains a key factor in Hong Kong’s success.
Sir John Cowperthwaite was Hong Kong’s financial secretary from 1961-71 and is widely credited for the prosperity Hong Kong enjoys today. An ardent free-marketeer, Cowperthwaite believed that government should not try to manage the economy. One salient feature of Cowperthwaite’s policies: His administration didn’t collect any economic data during his tenure. Not even gross domestic product was calculated. When the American economist Milton Friedman asked why, Cowperthwaite replied that once the data were made available, officials would invariably use them to make the case for government intervention in the economy. …Without data, busybody bureaucrats had no way of justifying interference in the economy. In Cowperthwaite’s Hong Kong, the government did only the bare minimum necessary, such as maintaining law and order… The rest was left to the private sector. …When asked what poor countries should do to emulate Hong Kong’s success, he replied, “They should abolish the office of national statistics.”
Now that we’ve looked at some of the factors that enabled Hong Kong’s prosperity, let’s consider what may happen if there’s a crackdown by China.
Professor Tyler Cowen shares a pessimistic assessment in his Bloomberg column.
Hong Kong has been a kind of bellwether for the state of freedom in the wider world. …By 1980, Milton Friedman’s “Free to Choose” series was on television, portraying Hong Kong as a free economy experiencing huge gains in living standards. The skyline was impressive, and you could get all the necessary permits to start a business in Hong Kong in just a few days. The territory showed how Friedman’s theories worked in the real world. Hong Kong stood as a symbol of a new age of freer markets and growing globalization. …Hong Kong still ranks near or at the top of several indices of economic freedom. But…[n]ot only is there the specter of Chinese intervention, but there is also a broader understanding that the rules of the game can change at any time… Meanwhile, many Hong Kong residents know their behavior is being monitored and graded, and they know the role of the Chinese government will only grow. …Freedom is not merely the ability to buy and sell goods at minimum regulation and a low tax rate, variables that are readily picked up by economic freedom indices. Freedom is also about the…legitimacy and durability of their political institutions. …Circa 2019, Hong Kong is a study in the creeping power and increasing sophistication of autocracy. While it is possible there could be a Tiananmen-like massacre in the streets of Hong Kong, it is more likely that its mainland overlords will opt for more subtle ways of choking off Hong Kong’s remaining autonomy and freedoms. …right now, I would bet on the Chinese Communist Party over the protesters.
If Cowen is right, one thing that surely will happen is that money will flee.
And that may already be happening. Here are some excerpts from a Bloomberg report.
Private bankers are being flooded with inquiries from investors in Hong Kong…wealthy investors are setting up ways to move their money out of the former British colony more quickly, bankers and wealth managers said. A major Asian wealth manager said it has received a large flow of new money in Singapore from Hong Kong over recent weeks, requesting not to be identified due to the sensitivity of the issue. One Hong Kong private banker said the majority of the new queries he receives aren’t coming from the super-rich, most of whom already have alternative destinations for their money, but from individuals with assets in the $10 million to $20 million range. …The extradition fight reinforced concerns among Hong Kong investors and democracy advocates alike that the Beijing-backed government is eroding the legal wall separating the local judicial system from the mainland’s. …The recent demonstrations are the latest trigger in a long process of Chinese money flowing to Singapore, London, New York and other centers outside Beijing’s reach. …“Hong Kong has shot itself in the foot,” said Chong, a Malaysian who has permanent residency in both Hong Kong and Singapore. “Can you imagine Singapore allowing this?”
And keep in mind that big money is involved. Here’s a chart that accompanied the analysis.
Looking at these numbers, I want to emphasize again that China also will suffer if a crackdown causes money to flee Hong Kong.
Which is President Xi should resist the urge to intervene.
I’ll close with this visual depiction of Hong Kong’s amazing growth.
Let’s hope Beijing doesn’t try to reverse this progress.
P.S. You’ll notice that I didn’t advocate for democracy, either in this column or in the interview. That’s because I’m more concerned with protecting and promoting liberty. Yes, it’s good to have a democratic form of government. If I understand correctly, there’s also an empirical link between political freedom and economic freedom. But sometimes democracy simply means the ability to take other people’s money, using government as the middleman. That’s why the people of not-very-democratic Hong Kong are much better off than the people of democratic Greece.
…Given all of this good behavior, conservatives might expect that Japan’s poverty rate would be very low. But the opposite is true; Japan has a relatively high number of poor people for an advanced country. Defined by the percentage of the population earning less than half of the median national income, Japan’s poverty rate is more than 15% — a little lower than the U.S., but considerably higher than countries such as Germany, Canada or Australia… This suggests that there is something very wrong with the conservative theory of poverty.
A uniformly poor society in which 99 percent of the people live on 50 cents a day and 1 percent live on 49 cents a day would have a poverty rate of 0.00; a rich society with incomes that are rising across-the-board but are rising much more quickly for the top two-thirds would have a rising poverty rate… It would be far better to consider poverty in absolute terms, but our progressive friends are strangely resistant to that.
and the alleged rate of poverty would decline.
