A Critical Analysis of “Is America #1”

Haywood Glenn Clayton

384 Shelton Road

Madison, AL 35758

hgclayton@mail.com

Grade 12

Bob Jones High School

650 Hughes Road

Madison, AL 35758

Teacher: William Couch

John Stossel explores why Hong Kong has prospered in his video: “Is America #1?” Stossel identifies factors such as population density, natural resources, and the size and role of government in his comparison of the United States of America, Hong Kong, and India. He cites economic freedom and limited government intervention, e.g. the ease of starting a business, as the central components in a remarkable economy. Limited government intervention in business enterprises lends Hong Kong to a Darwinist type of economy, one in which weak businesses fail and leave room for the successful (thus more efficient and productive). The Fraser Institute’s Economic Freedom Report has ranked Hong Kong first in economic freedom every year since 1970.³ Therefore, the question of interest becomes, “Does economic freedom alone account for this success?” Stossel’s assessment is overly simplistic in its analysis of Hong Kong’s economy. Its focus is too narrow to provide a clear and complete picture of all of the underlying factors for Hong Kong’s success. He neglects to stress the importance of the political and social stability enjoyed by Hong Kong. Mr. Stossel pays scant attention to the fact that Hong Kong has a history conducive to sustaining its role as an economic powerhouse. Nor does he take into account Hong Kong’s location and the conditions present in surrounding regions. Complementarity ensures Hong Kong’s role as the keystone of economic development in Southeast Asia. Importantly, Stossel completely ignores the fact that city governance and governing a country are extremely different, both ideologically and practically.

Hong Kong was little more than a rocky island before the intervention of Westerners in the early nineteenth century. British merchants began exporting opium to China in exchange for Chinese goods. This outraged the Chinese, who had long been isolationist, and led to the Opium War. Victory by the British in the Opium War led to their control and colonization of Hong Kong. In 1898, the colony was expanded by the British negotiation of a 99-year lease of Hong Kong.¹

Hong Kong grew and prospered greatly under British rule. The first half of the twentieth century saw Hong Kong transformed into the nucleus of British-Asian trade. Utilizing its excellent natural harbor, Hong Kong became a powerful shipping and trading outpost. The population increased exponentially, reaching 2.2 million by the 1950’s. The growing labor force, coupled with a steady inpouring of entrepreneurs, provided the foundation for Hong Kong’s continued prosperity in the second half of the twentieth century. Initially, Hong Kong prospered as a manufacturing hub - a result of the abundant cheap labor.¹ However, by the 1970’s global financial services had taken root on the island and low-wage jobs like manufacturing moved to Mainland China². These developments would be instrumental to Hong Kong’s maturing into an economic powerhouse.

As China opened her doors to trade in 1978, she began to reevaluate the future significance of Hong Kong as a possible gateway for economic growth. With the prospect of regaining Hong Kong as an entrepôt, China secured an agreement with the United Kingdom to assume control of the city upon termination of the British lease in 1997. Negotiations between the UK and China resulted in Hong Kong’s status as a “Special Administrative Region” of China. This system would function under the principle of “one country, two systems.”² Thus, Hong Kong enjoys considerable autonomy, thereby preserving its long-standing social, economic, and political traditions.

Hong Kong’s colonial history helped it tremendously in transforming to what it is today. Britain’s presence alone brought many business interests to Hong Kong due to her past record of success, in both Great Britain and her colonies. The British policy of installing self-governance and economic order laid a foundation, bringing prosperity to obscure areas by providing stability and markets for trade. This security factor encouraged an influx of capitalist entrepreneurs. Less prominent, but no less important, was America’s extensive financial and technical support of Hong Kong during the Cold War. America encouraged Hong Kong to “tap into the American market’’ and to pursue mercantilist policies, enabling expansion and protection of their domestic economy. The United States’ desire to protect democracy in Asia coincided with Hong Kong’s economic interests, creating a mutually beneficial symbiotic relationship.⁴

Throughout the mid-twentieth century, Hong Kong proved an island of stability in a promising but uncertain region. With a negotiated agreement with China to maintain its autonomy until the year 2047, Hong Kong is an entrepreneur’s dream.² Limited government intervention insures little threat to private business. Additionally, the system by which Hong Kong’s officials are chosen helps to ensure political stability. Consider other countries possessing vast natural resources and positioned in favorable sites and situations. For example, Columbia, endowed with all of these advantages, should be economically robust. However, constant social and political turmoil repeatedly aborts any opportunities on which Columbia should be able to capitalize.

The most glaring omission from Stossel’s analysis is the fact that Hong Kong is a city, not a county. (sic) There is a significant difference in administering a city as opposed to a country. In the governing of a country one must take into account diverse groups of people, different religions, varied physical topographies, different climates, and regional issues - often resulting in a multiplicity of goals within a single political entity. A good comparison can be made with former New York Mayor Rudy Giuliani’s success at turning around the economically powerful city of New York. Giuliani did an impressive job of “cleaning up” the city and enticing business to return. However, would Giuliani have had the same success with the U.S.A. as a whole? While truly an international city, surely governing New York City is simpler than a diverse country. Consider India, a complex interwoven society made up of many different religions and social systems, governing it is clearly a much more challenging proposition than the more compact and homogenous Hong Kong. Could India implement the same policies as Hong Kong and have success? A correlation is impossible given the distinctiveness of each.

Stossel’s main goal is to challenge us to think. He definitely succeeds in that respect. While his assessment neglects a few important points, overall, he does get a crucial concept across - economic freedom results in economic success. In addition, one must consider the target audience and time allotted to convey the message. Considering the complexity of the subject and time frame in which it is presented, Stossel does an admirable job with the video “Is America #1?” He forces us to question preconceived notions and recognize the fundamental element of our prosperity, liberty.

Works Cited

Documented Source 1: http://www.historychannel.com/perl/print_book.pl?ID=92220

Documented Source 2: http://www.economist.com/countries/HongKong/index.cfm

Documented Source 3: http://www.freetheworld.com

Documented Source 4: Essentials of Comparative Politics, 2004, Patrick O’Neil (Pages 270-272)