Dan Ryan (The Australian, 3 December 2009)

An abridged version of the notorious The Monthly article in which Kevin Rudd blames the financial crisis on neo-liberalism has just appeared in The South China Morning Post, raising eyebrows and questions in Hong Kong.

In particular, what exactly was Rudd trying to achieve? Hong Kong was not mentioned in the piece by name nor was there any explanation of the essay’s relevance to this city. The least that one expects for these pieces is that they be written fresh for the occasion. Instead, the impression was given of mild contempt for local readers in submitting a month-old piece. Was it to satisfy the intellectual exhibitionism of the author or was the article a too-clever-by-half underhand critique of Hong Kong itself?

For what Rudd surely knows is that Hong Kong, more than any other place in the world, embodies the economic liberal tradition he has chosen to pillory. Indeed, Hong Kong can claim to be the birthplace of modern economic liberalism. It was here in the 1960s under the guidance of the legendary John Cowperthwaite that the “positive non-interventionist” policy framework of low taxes and minimal but principled regulation was put in place. It was here that Milton Friedman came in his famous “Free to Choose” series to popularise to the public in the US and Britain how and why free markets work. And perhaps most importantly, from Australia’s long-term perspective, it was here in Hong Kong that mainland China turned — and still turns — to guide its own economic liberalisation.

If the intention was to critique Hong Kong — and clearly if you hold the views Rudd expressed in The Monthly then it should be critiqued — why not do it forthrightly? Wasn’t Rudd telling us a while back that that’s what a zhengyou is for?

The answer I think is that there is far more political mileage to be gained in firing up the old brigade by labelling people such as Ronald Reagan, Margaret Thatcher and John Howard “free market fundamentalists” and not so much by attacking good old Hong Kong. Yet the reality is the programs of these Western “neo-liberal” leaders even in their heyday did not achieve anywhere near the level of economic liberalisation that Hong Kong has long enjoyed and, indeed, still enjoys today.

The absence of Hong Kong in Rudd’s article is thus probably perhaps the most conclusive evidence that the motive for writing it was not to honestly examine the economic crisis but to rather exploit it in broad-brush terms for his own political purposes.

If the intention was to suggest that Hong Kong should change to a more state-directed or state-regulated economy then there is little chance of that. Not only is the political culture sensitive to any reduction as the world’s freest economy status but there are institutional bulwarks that would put a break on this, including Article 5 of Hong Kong’s 1997 Constitution that explicitly states: “The socialist system and policies shall not be practised in the Hong Kong Special Administrative Region, and the previous capitalist system and way of life shall remain unchanged for 50 years.” Yes indeed, while others just rave against alleged socialist policies, here in Hong Kong we explicitly ban them.

Could it be though that the real audience was not Hong Kong but mainland China? If this is the case it seems rather misguided and potentially harmful to the direction that Australia wants to see China head. For what Rudd must understand — yet gives no real sense of in his essay — is that the economic liberalisation that China has undertaken was not inevitable, is by no means complete, and is not irreversible.

It has needed and continues to need constant pushing along. Its economic liberalisation has advanced in the face of critics who still make arguments not dissimilar to Rudd’s that the state needs to reassert its role in the national economy and national life. One of the key reasons it did advance was because the Chinese leadership was provided with shining examples — Hong Kong, and also the success of the US and Britain during the ’80s — which demonstrated that economic liberalisation was clearly the path to greater wealth and prosperity.

There is a diverse range of voices in China at present — many with much more economically liberal views than Rudd’s — but make no mistake, there are also plenty of powerful ideological diehards and technocratic control-freak bureaucrats eager to reassert their authority over the economy and the private lives of Chinese citizens. It is thus troubling when the Mandarin-speaking Prime Minister of a friendly nation writes: “The great neo-liberal experiment of the last 30 years has failed. The emperor has no clothes.” To which group in China do such statements give greater intellectual and emotional support? Is it wise to suggest the path China has been following for the past 30 years is a fraud?

One final point. Rudd needs to stop using Friedrich Hayek as some type of byword for selfishness and greed or claiming that he is somehow against altruism. These claims are intellectually dishonest and will do nothing for Rudd’s post-political career as a self-styled political philosopher, a role for which he seems to be positioning himself. While we are not the first to notice that Rudd doesn’t seem to understand the plain words of the guy he holds up as a bogeyman, we may be the first to propose a solution.

A couple of years ago our institute published a revised version of Hayek’s The Road to Serfdom in Chinese. We use it regularly when speaking to high school students in Hong Kong and have come informally to refer to such talks as the Children of Hayek lectures after one of Rudd’s earlier journalistic ventures a few years back. The Prime Minister will be pleased to know that we have popped a signed copy in the post to him. We sincerely hope he spends some time reading it over his next summer holidays.

Dan Ryan is a director of the Lion Rock Institute.

To read the articles Dan Ryan responds to here, see:

http://www.theaustralian.com.au/news/opinion/kevin-rudd-child-of-hayek/story-e6frg6zo-1111112713990

http://www.themonthly.com.au/monthly-essays-kevin-rudd-global-financial-crisis–1421