Tuesday, April 26, 2005

First Sign of the Tide Turning?

Is this the first sign that the message of "Lost Legacy" is having an, albeit, small impact, and the trend is in the right direction?

James Keith correctly presents the basic message I try to get through about Adam Smith. He was not a sort of econmic version of so-called "social-darwinism" (neither was Charles Darwin!). Smith was not for "capitalism, red in tooth and claw". He knew nothing of capitalsm and would have found such talk uncomfortable when set against his moral philosophy, captured by James Keith.

Smith's message was about how competitive markets in stable societies, under individual liberty and the rule of law not men, would enhance the living standards of all, especially the very poor and those on subsistence wages. Of course, he knew that the wealthy would gain most but that was the way human societies worked. Allowing monopolists freedom to exploit their suppliers, employees and consumers was not in his message, nor was curbing competition by social programmes of 'equality' of outcome as opposed to equality of opportunity. Once this message from Smith becomes general then a whole host of suggestions would emerge to make societies more harmonious, more efficient (waste is a tax on poverty), and less divisive.

Remarks by U.S. Consul General James R. KeithAmerican Chamber of Commerce LuncheonJ.W. Marriott Hotel, Hong Kong, Monday, April 25, 2005
(As prepared for delivery)

"Hong Kong's Political Economy

The Scotsman Adam Smith speaks in his writing to the heart of Hong Kong's success. Like Hong Kong itself, Smith is often taken to mean different things to different people. As Professor Gavin Kennedy of the Edinburgh Business School has written, Smith was a moral philosopher who wrote about political economy. He took the long view of social development and had a healthy skepticism of quick fixes. Stability was a virtue, and even serious deficiencies needed time to be repaired. Commerce was the inexorable means toward the objective of a prosperity that would settle deeply into society, creating and increasing wealth through investment and the expansion of jobs. This much is universally associated with Smith and his Wealth of Nations and seems to apply directly to Hong Kong's situation. But to me, Smith's Theory of Moral Sentiments is his greater legacy. Smith saw society evolving in ways that would produce natural harmony through the increasing dependence of individuals on the labor of their fellow citizens. As Professor Kennedy notes, Smith believed people in society would serve their own interests by serving the interests of others from whom they needed life's daily necessities. Smith's legacy, and the key point for Hong Kong, is his blend of liberty, justice, and economics. In Theory of Moral Sentiments, Smith writes:

"What reward is most proper for promoting the practice of truth, justice, and humanity? The confidence, the esteem, and love of those we live with."

This notion of Smith's reflects a key proposition I have tried to articulate during my tenure in Hong Kong. In discussing American ideals and values against the backdrop of the social, political, and economic upheavals over the past several years, my message could be reduced to a very simple proposition. It's a proposition that harks back to the Basic Law and the Joint Declaration. It recalls wartime Governor Sir Mark Young and continues back to Adam Smith. It is simply that we believe the people's voice should be heard. As the people have voiced a clear preference for the rule of law, we suggest an overriding principle of our domestic and foreign policy: Trust your people. As Smith rightly advises, it is essential for the people to build trust and confidence in each other if the government is to trust the instincts and preferences of the masses."

The full text of retiring US Consul General for Hong Kong, James Keith's speech can be found at: http://tokyo.usembassy.gov/e/p/tp-20050426-18.html


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