Positive non-interventionism
Encyclopedia
Positive non-interventionism was the economic policy of Hong Kong
; this policy can be traced back to the time when Hong Kong was under British
rule. It was first officially implemented in 1971 by John Cowperthwaite
, who observed that the economy was doing well in the absence of government intervention but it was important to create the regulatory and physical infrastructure to facilitate market
-based decision making. The policy was continued by subsequent Financial Secretaries, including Sir Philip Haddon-Cave. Economist Milton Friedman
has cited it as a fairly comprehensive implementation of laissez-faire
policy, although Haddon-Cave has stated that the description of Hong Kong as a laissez-faire society was "frequent but inadequate"
According to Haddon-Cave:
Haddon-Cave goes on to say that the "positive" part means the government carefully considers each possible intervention to determine "where the advantage" lies, and although usually it will come to the conclusion that the intervention is harmful, sometimes it will decide to intervene.
This policy means that the government had to respond when industries with social obligations ran into trouble and when an institution needed regulation to prevent inequitable practices.
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
; this policy can be traced back to the time when Hong Kong was under British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
rule. It was first officially implemented in 1971 by John Cowperthwaite
John James Cowperthwaite
Sir John James Cowperthwaite KBE CMG , was a British civil servant and the Financial Secretary of Hong Kong from 1961 to 1971...
, who observed that the economy was doing well in the absence of government intervention but it was important to create the regulatory and physical infrastructure to facilitate market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
-based decision making. The policy was continued by subsequent Financial Secretaries, including Sir Philip Haddon-Cave. Economist Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
has cited it as a fairly comprehensive implementation of laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
policy, although Haddon-Cave has stated that the description of Hong Kong as a laissez-faire society was "frequent but inadequate"
First-hand explanation
According to Cowperthwaite:
"In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralised decisions of a government; and certainly the harm is likely to be counteracted faster."
According to Haddon-Cave:
"positive non-interventionism involves taking the view that it is normally futile and damaging to the growth rateEconomic growthIn economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
of an economy, particularly an open economyOpen economyAn open economy is an economy in which there are economic activities between domestic community and outside, e.g. people, including businesses, can trade in goods and services with other people and businesses in the international community, and flow of funds as investment across the border...
, for the Government to attempt to plan the allocation of resources available to the private sectorPrivate sectorIn economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
and to frustrate the operation of market forces"
Haddon-Cave goes on to say that the "positive" part means the government carefully considers each possible intervention to determine "where the advantage" lies, and although usually it will come to the conclusion that the intervention is harmful, sometimes it will decide to intervene.
This policy means that the government had to respond when industries with social obligations ran into trouble and when an institution needed regulation to prevent inequitable practices.
External links
- Big Market, Small Government - by Donald Tsang, Chief Executive of Hong Kong