Earlier I wrote about the limits of social of science and the need for control groups as the most reliable and accurate means to establish causation. In today’s But If Not I recall a Milton Friedman story where he compares different economies over fifty years as a controlled economic experiment. The Hong Kong Experiment.
He describes Hong Kong as the free economy, the United States as the mixed economy and Britain and Israel as socialist economies.
The British, while maintaining control over Hong Kong after WWII, appointed John Cowperthwaite (a Dickensian character in more than name) as financial secretary. Over the next 50 years Britain and Israel practiced Fabian socialism and, under Cowperthwaite’s aggressively hands-off policy, Hong Kong practiced laissez-faire capitalism.
The result was that from 1960 average per capita income in Hong Kong rose from 28% of that in Great Britain to 137% in 1996. In four decades the tiny overcrowded island nation with no natural resources had a higher level of income than its economic superpower benefactor.
The agent for this growth can be captured in this little recantation from Friedman on his conversation with Cowperthwaite.
I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of statistics. He answered, “If I let them compute those statistics, they’ll want to use them for planning.’’