The low-tax beginnings of American prosperity
On July 1, 1997, the British Crown Colony of Hong Kong becomes the Hong Kong Special Administrative Region of the People's Republic of China. China has signed an international treaty with Britain and issued a Basic Law, or miniconstitution, for Hong Kong; these promise that Hong Kong can remain autonomous for fifty years after 1997, save in matters of security and diplomacy, and ensure that Hong Kong people will continue to enjoy their rights and freedoms under Hong Kong law.
China has made a mockery of these promises and guarantees. China has dissolved Hong Kong's duly elected Legislative Council and replaced it with a handpicked assembly. China has set up a mechanism that will nominate a new chief justice who will do China's bidding. China has scrapped or modified a number of existing laws, thereby rolling back Hong Kong's current civil liberties. China has placed editorial consultants inside leading Hong Kong newspapers. China has announced restrictions on press freedom, freedom of assembly, freedom of political parties to solicit funds, and freedom of demonstration. China has indicated that English education will be downgraded. And, in a marked departure from Hong Kong's level economic playing field, China's state-owned firms have acquired Hong Kong assets at substantial discount to market. These below-market acquisitions presage a new era of graft, cronyism, connections, and bribery for Hong Kong under Chinese rule.
The transcript of the session “Workshop Series on the 2008 Financial Crisis: The Causes,” at the Hoover Institution, Stanford University on October 19, 2018. Chaired by John Cochrane with opening presentations by John B. Taylor and Monika Piazzesi, followed by a general group discussion.
For almost three decades the U.S. embargo of Cuba was part of America's cold war strategy against the Soviet bloc. It should have been lifted after that ‘‘war’’ ended since Castro ceased to threaten the United States and its neighbors and adopted the standard rules of international behavior. But inertia, a powerful Cuban American lobby, and misguided politicians set new demands: democracy, improved human rights, and economic reform. When Castro demurred we tightened the sanctions in 1992 and again in 1996 with the Helms-Burton Law. The United States has never committed the resources necessary to overthrow Castro, however, and the pressures we have applied have utterly failed to advance the three objectives. Worse yet, in the post–cold war world the policy and political outlook that sustain it have become a strategic liability. They promote conflict, both within Cuba—where a crisis might draw in the U.S. military—and abroad, as occurred in 1999–2000 after the arrival in Florida of the rafter boy, Elián González. They allow pressure groups to stand in the way of the policy-making process of the U.S. government. For example, the lobby manipulated wishy-washy politicians in 1998–1999 and got the president to turn down a widely supported proposal for a bipartisan commission to conduct the first comprehensive evaluation of the policy in four decades. Finally, the imperialistic Helms-Burton Law alienates allies worldwide and will poison relations between the United States and Cuba for decades to come. Castro will benefit no matter what we do, but on balance he gains more if we maintain the sanctions because they provide a scapegoat for his own repression and economic failures even as they enable him to maintain his cherished global image as the ‘‘scourge of U.S. imperialism.’’ Castro can wage a worldwide campaign against the embargo to bolster his image knowing Washington is too inflexible to change it. Indeed, whenever Washington has lightened up, Castro has tightened up and effectively prevented further improvement. Lifting sanctions need not mean establishing friendly relations with Castro—which he would reject in any event—or supporting his efforts to get international aid without meeting standard requirements. The ultimate responsibility for maintaining this antiquated and potentially dangerous policy falls on politicians who either do not understand the need for, or for political reasons are afraid to support, a new policy to benefit both Americans and Cubans in the post–cold war world.
Stanford talks to Hoover Institution research fellow about government funding gaps over the past 35 years.