While Refusing to Support Hong Kong's Democracy, Obama Strongly Condemns Israel

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By Thomas Rose 

Hong Kong's pro-democracy demonstrators protesting China’s attempts to quash their rights to self government appear to be only the latest pro-Western group forsaken by the Obama administration. Meanwhile, its high volume criticism of Israel continues unabated. 

First, Hong Kong. Protests in that former British colony have grown massively since they started last Friday. The demonstrators-- and, if opinion polls are correct, also the overwhelming majority of Hong Kong People-- oppose the communist government in Beijing’s refusal to stand by provisions of the 1984 Sino-British Joint Declaration that spelled out the conditions under which Hong Kong would be governed after its return to China from Britain. Hong Kong’s constitution, or Basic Law negotiated as part of the of Joint Declaration, guarantees Hong Kong’s right to govern itself on all non-defense or foreign affairs matters through 2047.

Protestors claim that China reneged on that agreement in June when it announced that Beijing would decide which candidates would be permitted to run in the 2017 elections to pick the self governing city’s next Chief Executive thereby insuring it would have full control over all the candidates that seek that office.

As up to a quarter million protestors peaceably took to Hong Kong streets demanding freedom last weekend, neither President Obama nor any other senior administration official said anything at all. It wasn’t until Tuesday that the US consulate in Hong Kong got around to issuing its first statement and it sided not with the protestors or their freedom cause:

We do not take sides in the discussion of Hong Kong's political development, nor do we support any particular individuals or groups involved in it... We encourage all sides to refrain from actions that would further escalate tensions, to exercise restraint and to express views on (Hong Kong's) political development in a peaceful manner.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu was again forced to downplay harsh criticism against the Jewish state leveled by President Obama and other members of the administration during their White House visit Wednesday. Media reports claim that Obama harshly condemned the recent issuance of building permits for 2,610 apartment units inside the Israeli capital city, without seeming to understand that those decisions are made at the local, not the national level.

A Jerusalem real estate developer recently purchased seven apartment buildings in the predominantly Arab neighborhood of Silwan and purchased advertising to encourage Jewish families to buy them.

Netanyahu pushed back hard against the President’s condemnation. He told Spanish language Univisión TV that “Jews buy apartments in Arab neighborhoods. Arabs buy apartments in Jewish neighborhoods. I wouldn’t dream of interfering with that, and couldn’t even if I wanted to." "It is a municipal issue,” he said.

Pointing out President Obama’s hypocrisy of siding with those who seeking to prevent Jews from certain neighborhoods in Israel’s capital city, Netanyahu pointed out “there would be an uproar” if neighborhoods in the US, Mexico, or anywhere but Israel tried barring Jews from moving in. In comments that also appeared aimed at the Obama Administration, Netanyahu seemed to chide the White House and State Department for thinking they were empowered to micromanage the Jewish state down its most granular bureaucratic level: “It would be worth at least learning the correct information before jumping to take a position like that.”

Both the White House and State Department issued harsh condemnations of the new Jewish housing units, going to so far as to threaten the Jewish state with abandonment if it continued allowing Jews to move into neighborhoods that are predominantly Arab.

Former Israeli Deputy Prime Minister and Soviet dissident Natan Sharansky writes and speaks regularly about how vital it is for freedom movements to know their struggles are neither desperate nor lonely. That they fight for values espoused by and embodied in the United States of America. When that support is not forthcoming, as in so many recent cases where President Obama has refused to offer even strong verbal support for freedom demonstrators in Iran and Venezuela, the effect can be devastating. Telling this author of the moment he heard of President Reagan’s denunciation of the Soviet Union as the ‘evil empire’ destined to fail while himself suffering a tortuous prison sentence in the Soviet Gulag abuses, Sharansky said: “It was one of the most important, freedom-affirming declarations, and we all instantly knew it. For us, that was the moment that really marked the end for them, and the beginning for us. The lie had been exposed and could never, ever be untold."

Culture matters when thinking about China's future

globalguerrillas

China is in the process cracking down on democracy protesters in Hong Kong. 

It's important to remember that China is a dictatorship.  It's almost always been a dictatorship.  It also has a long history of extreme insularity and xenophobia.

That's why it's important to consider this when investing in Chinese companies.  

As a dictatorship, China can nationalize all assets and shut its borders tight overnight.  It's done it many times before.  

This isn't ancient history.  Forty years ago, this government engaged in ruthless social engineering that killed an estimated twenty million people.

This and more is why investments in China, in particular the amazing valuation given to Alibaba ($200 billion plus) is nonsensical given the potential downside risks ($0 valuation overnight).

In contrast, countries like the US have a long tradition of economic and personal freedom.  It's one of the best features of American culture.  

How many countries have demonstrated that for 200 years plus?  

Very, very few.

Culture matters.  Don't discount it.  

Hong Kong Vs Cuba. Capitalism Vs Socialism.

Bruce On Politics

Let’s get started with a quick recap:

Capitalism. Under this system an organisation can only survive in the market by looking after the customer. By delivering goods or services of the right quality at the right time at the right price. Otherwise they go bust.

Socialism. Under this system the state directs what goods and services will be delivered, what their quality will be and also the price. This cannot possibly exist in a market because competition would kill it, so monopolies are essential for it to function. Such organisations exist for the benefit of the state, not the customers. They cannot go bust because they can fix prices and rely on the state for subsidies of taxpayers money.

Now let’s look at what assets and strengths Cuba has to enrich their people with:

• Its people. 11 million very well educated people. Their literacy and numeracy rate is better than Britain’s. Number 5 in the UN Education index.
• Incredibly verdant and productive agriculture. Rich soil and a tropical climate combine to allow several crops per year.
• Nickel and Cobalt. There are 5.5 million tons of Nickel waiting to be mined, 7% of the world total.
• Oil. Cuba is an oil producer and known reserves of 20 billion barrels, one of the top 20 reserves in the world.
• Tourism. Cuba is an idyllic tropical paradise with amazing beaches.

Contrast and compare with what Hong Kong has to offer:

• Seven million educated people. Number 87 in the UN Education index.
• A great harbour.
• Nothing else.

As you can see Cuba has Hong Kong well beaten.

Cuba was capitalist until 1959, when Castro took over. So let’s have look at how things were then.

• 80% of the landmass was under cultivation or used for grazing. Cuba was second only to Brazil in exporting agricultural products to USA.
• Cuba’s real per capita income was $378, fourth in Latin America. Spain ($324) and Portugal ($212), were both lower.
• The share of national income paid to workers was 65 percent, only Great Britain, the United States, and Canada. were higher.

Now lets look how Hong Kong was doing (the then colony deliberately didn’t gather data and statistics!):

• After WW2 HK had a population of just 600,000, during the 1950s there was a immense influx of refugees from China. 100,000 a month came till the population exceeded 3 million. Many lived in shanty towns.
• With nothing for all these people to do the British colonial masters started manufacturing projects to make simple, low cost items like buttons, plastic items, umbrellas, artificial flowers etc.

Once again you can see Cuba has Hong Kong well beaten.

From this basis the two economies took different courses. Socialist Cuba couldn’t produce sugar competitively against world prices. They were rescued by the Soviet Union who bought the entire sugar crop at subsidised prices so as to keep Cuba afloat. When the Soviet Union imploded this stopped and 100,000 sugar workers lost their jobs. Visit Cuba today and great swathes of fertile farmland lie unused. Much else in the economy was also trashed as huge socialist inefficiencies stopped anything working properly. There was very little investment in buildings or infrastructure. Cuba now and is mostly frozen in a 1959 timewarp, but in a state of decay and disrepair.

In 1961 a Britain, John James Cowperthwaite, became financial secretary of Hong Kong, which was still a very poor. He invented and implemented “positive non interventionism” a highly libertarian management of the economy. This worked like magic and between 1961 and 1997 Hong Kong’s gross domestic product grew to be 180 times bigger. Everyone who lived in Hong Kong was free to do anything they wanted. There was minimum tax and minimum government. Enterprise, investment, risk taking, entrepreneurship were everywhere. Success was rewarded. Hong Kong became the most dynamic economy in the world.

So how are things today in Hong Kong:

• Economic freedom score is 90.1, making it the top-rated economy in the Index for the 20th consecutive year.
• This small country has the world’s 8th largest trading economy.
• World Bank GDP/capita (PPP) $ 53,203 rating the country 9th in the world.
• 124,000 millionaires (calculated  excluding primary residence). Number growing at 27% per annum, the highest rate in the world.
• Number 15 on the world corruption index with a score of 75 (UK 76).
• Basic income tax rate of 2%. Top rate 17% on income over HK$ 120,000.

And in Cuba:

• Economic freedom score is 28.7, making its economy one of the world’s least free.
• World Bank GDP/capita (PPP) $ 18,796 rating the country 60th in the world.
• The main millionaire on Cuba is Fidel Castro with a fortune of $900 million stolen from the people.
• Number 63 on the world corruption index with a score of 46.

So there you have the irrefutable facts. Socialism is utterly disgusting and immoral, it damages the lives of everyone it touches except those at the very top who become enormously rich. Capitalism, unfettered. delivers incredible results. It enable anyone to become very rich who wants to. All they have to do is provide customers with what they want. This is by far the most moral form of human organisation.

Critics say that Hong Kong is small and that such measures cannot be applied to a big economy. They are wrong. China looked at what Hong Kong was doing and it was copied there by Deng Xiaoping in the 1980s. We have all seen the meteoric growth in the Chinese economy since then.

Other critics say that Cuba’s economy was held back by being embargoed by its regional superpower, the USA. They forget that Hong Kong was also embargoed by its regional superpower, China.

The system of having minimum government is called a Night Watchman State, economist advocates call it minarchism. It allows maximum human freedom, people can build their lives undisturbed by government extortion, they take responsibility for themselves. It also ensure the maximum competition when you spend your money as a customer. So you get better goods and services at better prices. Everyone in society wins.

Given the evidence it is amazing that every country has not done this. It is also utterly beyond belief that anyone can be stupid enough to vote for a socialist government. Socialism is our enemy.

Remember. Capitalism pays for all the other -isms!