His Influence

After Sir John Cowperthwaite's retirment as the Financial Secretary in 1971, his successors including Charles Philip Hadden-Cove and John Henry Bremridge basically followed Sir John's market oriented framework with slight modification. Pointed out by Milton Friedman, "The results of his policy were remarkable." In 1945, Hong Kong was just a tiny poor island in the Far East. The per capita income of Hong Kong was only a quarter of the UK. By 1997, the per capita incomes of both places were about the same, though the UK also experienced a sizable gain in its economy in the same period. "That was a striking demonstration of the productivity of freedom, of what people can do when they are left free to pursue their own interests."

Some might think that the concept of free market is vague; however, Dr. James Gwartney, Professor of Economics at Florida State University, portrays the key ingredients of economic freedom as followed:

1. Personal choice
2. Voluntary exchange
3. Freedom to compete
4. Security of privately owned property

These are the cornerstones of a free market. In summary, individuals' self ownership and the right to choose ought to be respected. At the same time, nobody can intrude others' properties and all the exchange must be voluntary. Individuals have the freedom to decide how to use their time, talents and resources to compete with others. For a government promoting economic freedom, it needs to set up a just and fair platform for individuals to compete and to refrain itself from actions that interfere with personal choice, voluntary exchange of goods and services as well as the freedom of individuals and businesses to compete.

It was Sir John's market oriented and positive non-intervention system that released the potential of Hong Kong. After his departure, Hong Kong's real GDP continued to grow at 7%. Hong Kong has already become a world-class metropolitan and one of the wealthiest cities in the world. Hong Kong is known by the world so famously for its non-intervention and the place has been ranked as a freest economy for years. The 'market oriented soil' has contributed to the success of Hong Kong and the principle shoud be embraced.

The Influence of Sir John

Sir John has had a great influence on Hong Kong fiscal policy. His principle of keeping the expenditure within the limits of revenues and achieve a fiscal balance was written into the Basic Law of Hong Kong, representing widespread recognition by most people of Hong Kong and the government of China and the UK.

Almost no one, perhaps including even Sir John himself, could have imagined that his market oriented public financial regime would have such a great impact to the global economy. It was Friedrich von Hayek and Milton Friedman who put an intellectual case for the free market, but it was Sir John who showcased a theory into reality successfully. Hong Kong became a textbook example of a market oriented society and gave Margaret Thatcher and Ronald Reagan confidence when promoting economic reform and finally revived the economy of UK and US. Hong Kong was also the showcase for China's economic reform that started in the late 70s. Another country that was influenced by Hong Kong was New Zealand. Economic reform including massive privatization and drastic tax cut started back in 1980s. Now the unemployment rate is below 4%, even lower than that in Hong Kong.