Liberty in the crosshairs in Hong Kong

As pro-democracy demonstrations flare across Hong Kong, it continues to rank first in the world in economic freedom. Hong Kong has been at the top since 1970, according to the just-released Fraser Institute Economic Freedom of the World index, a collaborative effort of more than 100 research groups in 90 nations and territories. The 2014 report is based on 2012 data, the most recent available.

Democracy is no guarantee of prosperity, and Hong Kong has never been a democracy—so why is democracy important now? More than democracy is at stake—and that is why democratic evolution is crucial.

Hong Kong is a world miracle. We forget how desperate it was at the end of the Second World War. The territory was devastated by the war, poorer than most African nations, with no natural resources, not much potential as a trading hub, big neighbour China in turmoil (soon to be Communist), Japan ruined, and Asia as destitute as Hong Kong itself. Yet Hong Kong rose to become one of the world’s great cities.

Democracy is a human right but it and freedom are not the same thing. Democracy is a power structure; freedom is the ability to do with your life what you want.

Economic freedom, not democracy, has driven Hong Kong’s great growth. In creating prosperity, the ingenuity of individuals and families triumphs over government planning and the greedy elites of crony capitalism. Hong Kong boasts high levels of other freedoms: personal, speech, association, media, and religion.

All is now under threat. Despite its one country/two systems pledge, China clearly aims over time to impose its system on Hong Kong. A media chill has long been evident in Hong Kong as the press self-censors. Now China wants to halt what it once promised—Hong Kong’s evolution to democracy.

The issue is the selection of candidates. China has promised universal suffrage but only if it gets to choose all the candidates for Chief Executive Officer—long a trick of communist regimes, which sometimes offered people a vote, but only for communists.

Why is Hong Kong’s prosperity threatened? Western media portrays China itself as an economic miracle, open to free markets and wisely charting the turbulent waters that lead to turbo-charged growth.

This is fallacy. China is consistently about 100th in economic freedom—the best available measure of free markets—among the 152 jurisdictions the Fraser Index measures. Compare this to Hong Kong’s number one status.

To understand what’s going on, imagine a nation with abysmal policy, as China had under Mao. Policy is so horrid the economy cannot grow beyond a per capita income of $1,000 a year. Then it moves from abysmal to bad policy, as it did after Mao’s death, and that level of policy can produce an income of about $10,000 per capita. This is what happened to China. It moved from abysmal to bad policy, and that generated new growth, creating the impression of an economic miracle.

Yet, if a nation does not continue to reform and expand economic freedom, it stalls out at the new income level—it is called the middle income trap—and the “miracle” ends.

China is reaching that point. It is rife with state economic interference, state-owned “companies,” corruption, crony capitalism, and failure of the rule of law.

General Secretary Xi Jinping’s anti-corruption drive appears largely aimed at rivals. That is certainly the case in Hong Kong. There “anti-corruption” forces have raided the home of media mogul Jimmy Lai, who just happens to be a supporter of democracy. He has faced death threats, a fake obituary, and the withdrawal of advertising from his newspaper by firms like HSBC and Standard Chartered, reportedly under Chinese pressure.

This highlights the greatest threat to Hong Kong—its besieged rule of law. This is the infrastructure of economic and other freedoms. Without it, the rich and powerful use their position to undermine the freedom of others.

Earlier this year, China issued a report on Hong Kong calling judges “administrators” who had a “duty” to be patriotic to China—in other words, toss out the rule of law and obey Xi and the Beijing clique. Xi is promoting further economic reforms. That may help China continue to grow for a while, but unless Beijing addresses the rule of law issue, China cannot move to the top ranks of prosperity as has Hong Kong.

A senior justice administrator in Hong Kong once told me that busloads of mainland Chinese passed through Hong Kong offices to hear explanations of what the rule of law is. When I asked this administrator if they got it, the response was “not a clue.”

All this is why democracy is important, and for more than just its own intrinsic value. The people of Hong Kong need it to protect the rule of law and their freedoms from the Chinese onslaught—potentially turning the rule of law into a political instrument. Corrupting the rule of law in Hong Kong and eroding the freedoms of its people would be an attack on Hong Kong’s future prosperity and international standing. With democracy, the people of Hong Kong will never allow it.