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Asian Think Tanks Meet

December 3, 2004

Today Southeast Asia is proof of libertarian concepts that trade and free markets can bring about political stability, international cooperation and, eventually, civil liberties.  Also their democratic evolution followed the Anglo Saxon model of direct representation instead of proportional representation (whereby parliaments are selected from Party Lists, used all over Latin America and in most of East Europe).  China is "behind" politically, but so dynamic that political takes second place.  Few would trade its prosperity for more political freedoms.

Asian cities today are a marvel that must be seen and visited to be believed. Also they are also mostly safe.  Asia is also benefiting from Washington's preoccupation with the Middle East.  American security concerns have caused great cut backs in conference participations, Asian student enrollments and benign neglect as China replaces American trade dominance in many countries, even in such nations as Australia (which now has a large anti-U.S. minority, since the Iraq war).  The growing standards of living are creating enormous internal markets. 

Last year, when visiting Malaysia with a delegation of Washington conservatives, I often asked if the U.S. market was still so vital for Asia.  They all assured me that it was. Asian and other free market think tanks met to network and exchange information and at a conference titled The Role of Government in Asian Economies, sponsored by the Atlas Foundation and China's Unirule Institute of Economics.  Most of the delegates had never met before, in particular the many Chinese and Indians attending.  Atlas Foundation Jo Kwong opened the meeting of Chinese, Indian, Korean, Indonesian, Bangladeshi, Philippine, Mongolian, Central Asian, and various other nations' freedom Think Tanks.  She told the delegates how success could only come from figuring how to promote such ideas using "your own culture," and how networking delegates "should learn from experiences in other nations."

 

Referring to the rule of law question above, Prof. Mao Yushi of Unirule, explained how constitutions were a western idea, foreign to Asia, that in China legal rights of individuals depended upon their social status, that traditionally everyone had different degrees of protection under the law. He said that the rule for think tanks in China was to be brave, but cautious and to maintain independence.  He explained that joining the World Trade Organization forced Asian economies to allow more political freedoms and transparency.  Explaining China's growth, he said that 80% of investment in China used to depend upon foreign funding, but that now it was about 50%.

 

Leon Louw of South Africa's Free Market Foundation  argued that nations did not need to reach the levels of free markets and dynamism of Hong Kong in order to have great  success and that the free market direction nations were heading  was also critically important.  Louw argued that people who want liberty are rare, that perhaps it was a "genetic mutation," that most people don't especially care about it for themselves and certainly don't want it for others.  He said that the only way to promote it was by convincing others that it would bring about economic prosperity and a safe society.  He said one can't "sell" freedom except when it is seen as necessary for economic progress.  Louw said that China's free trade zones offered the freest economy in the world, that there were no known prior examples in history of what China is doing

 

Jim Dorn, Cato's expert on China, gave the keynote speech on "Why Freedom Matters."  He said how China's culture of mutual respect was a great help for free market growth, and quoted Hayek about how a rule of law and justice are inseparable, that trade almost always led to less war while non-intervention by government brought about "spontaneous order."

 

Mike Walker, Director of Canada's Fraser Institute said that WTO (World Trading Organization) rules helped to reform corrupt judicial systems; he cited Mexico as an example. Walker gave a long explanation of his Institutes Index., which compares nations' economic growth and freedom, stating that it was based only on statistical data, without opinions.  He said that the distribution of national wealth between poorest and richest was very similar in most nations, but that the lowest percentile had 10 times the actual wealth in free market societies compared to the non-free.

 

Robert Lawson of Capital University in Ohio and co-author of the Index above, argued that there was no good way to show the "quality" of government spending.  He said how China was very difficult to measure because it did not "fit" into economic indices studies, that Hong Kong did not even have statistical data until the 1980's.  Others brought up the question of how comparison data does not show off budget items, e.g. the high cost of private medical insurance in America (included in tax rates for many other nations) or illegal businesses, or the "costs" of crime in discouraging economic savings and incentives, e.g. Latin America and Philippines.  Barun Mitra (see below) argued that the index's comparisons of nations was, however,  very helpful in supporting studies to convince government, e.g. India, how they needed to change policies, by showing how they had been falling behind other nations.

 

Government corruption was a widely discussed topic. Everyone agreed that it was always the consequence of government policies.  A Chinese delegate from the floor stated how Hong Kong was very corrupt in the 1960's, including widespread police shakedowns of businessmen and shopkeepers, but then changed very quickly, once government laws changed. Loewe (see above) added that bribes were usually prevalent when officials had discretionary powers.  He said there were two kinds of bribes, those to get action past government regulations, which could be "productive," and secondly those that were shake downs and protection money.  The first kind could be productive for an economy strapped by regulations, but the second kind always did damage to economic growth.

 

Prof. Chatib Basri, a widely published scholar representing Indonesia's Institute for Economic and Social Research, included a study on the transaction costs of bribes.  He estimated that bribes added 10% to costs in his nation, but said that bribes should at least be "economically efficient," that is to get things done.  Various others, including Germany's Friedrich Nauman Foundation representative there, Rainer Adam, told me that Indonesia had turned the corner and was looking good for the future.

 

Mike Nahan of Australia's Institute of Public Affairs warned how the NGO sector (Non-Government Organizations) was dominated by opponents of economic freedom, an opinion seconded by a South Korean delegate.  However, there were always some sectors of every government "which support freedom," and can be worked with.

 

Dr. Laveesh Bhandari, editor of Where to do Business in India said that any natural resources more than 2 feet under the ground, even including water, belonged to the government.  He explained that electricity shortages were very severe, that Keralia with its long time Marxist state government, still had good property rights, less corruption and better administration than many other states, the Punjab had bad property rights' protection.  He said that politically it was a negative to use the term privatization which connoted private profits and exploitation, that instead they used the word "disinvestment."  I noted a similar problem in terminology from my lecture in Cyprus on Lessons from Latin America's Privatization Programs.

 

I asked Barun Mitra of India's Liberty Institute, recent winner of one of Atlas' Templeton Awards, why India had changed and become a growing, in parts, dynamic economy.  He replied that, among other factors, voters put out a large percentage of the parliament with each election.  This had caused it to become much more responsible and accountable to concerns for bettering economic conditions.

 

Joseph Lehman represented Michigan's Mackinac Center which is also involved in helping Asian think tanks.  He explained how something as simple as parking in front of the teachers' union to watch how many private contractors they used –four- helped their campaign to allow Canadian schools to save millions and increase efficiency by permitting non-union labor for non-teaching jobs.

 

Yushi (above) decried U.S. "dumping" charges explaining that they were virtually impossible to defend against, that they used rich nations', e.g. Singapore's, costs to calculate the costs for a poor nation, i.e. ChinaVietnam's Cong Minh Nguyen added that "dumping penalties" against Vietnam's shrimp exports were based upon 4 year old statistics from Bangladeshi farming costs.

 

Other major speakers included Dr. Wang Xiaolu from Beijing who spoke on the Marketisation Index of China's Provinces, Dr. Francis Lui from Hong Kong University, speaking on government consumption, Dr. Sheng Hong, about the provision of public utilities in China and Dr. Mohammed Ariff of Malaysia on state intervention in the economy and Dr. Pierre Garello of France, speaking on An Index of Fiscal Decentralization in Europe.  Garello also was organizing an upcoming meeting of European think tanks in Bulgaria.  Another major speaker was Professor Richard Wong, Dean of the Faculty of Business and Economics at the University of Hong Kong.  He explained his city's new role as part of China and its vibrant resources.

Vietnam's Cong Minh Nguyen said that they had a 7% growth record now, since 10 years, that Saigon was now a U.S. Navy port call city, that foreign tourism was abundant because Vietnam was very inexpensive, that its people were young and open minded.  Adding to this I was told by Alan Dawson, an editor in Bangkok, which I subsequently visited, that there was very heavy Thai investment there, but that corruption and changing laws or rules of the game were the main problem.

 

Claiming that Slovakia had learned from Asia and was now the "Hong Kong of Europe," Jan Oraveck explained that 20% of public expenditure was for education.  He said that last year 90% of GNP came from the private sector, that 2/3rds of the economy was represented by small and medium sized companies, that Slovakia had followed the example of Chilean pension reform, that it had a low flat tax of 19% for both corporate and persons,  a tax system of simplicity, transparency and neutrality. ----said that simplification of regulations was responsible for an extra 2% of Slovakia's annual GDP growth of 7%, astounding for Europe.

 

Andrei Illarionov, economic counselor to President Putin of Russia of gave a very detailed talk with extensive video and graphs to rebut the theories of global warming.  He didn't speak much about Russia's economy today.

 

A delegate from the floor stressed how Washington's foreign policies were making it very difficult for pro-American Muslims, even though Arabs represented only 15% of the world's Muslims.  He said that many feel that the U.S. has started a war against Islam, that they see on TV U.S. bombs always directed against Muslims.  He said that it created a problem in convincing their people that the most basic struggle was for freedom and free markets against government centralization of power.

 

For a list of the 74 odd participants from 24 countries, together with their Institute name, please see the Atlas link

 

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Mr. Utley is a Fellow at the von Mises Institute. He was a foreign correspondent for Knight Ridder Newspapers in South America and has written and lectured extensively on 3rd world economic development.

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