Britannia Radio

How Hong Kong Got Rich... And How America Could Too By Dr. Steve Sjuggerud Tuesday, August 2, 2011 Look, I don't drink and I don't smoke. I go to bed early. In general, I'm about as straight-and-narrow as it gets. But on Sunday, no matter what I did, I couldn't help but break the rules. There were just too many rules… that was the problem. I'd stumble on one rule, only to trip over another. I wondered if I was really in the United States of America… I'll share one tiny example with you from my weekend… And then I'll share the simple secret to building fantastic prosperity in a country like ours. (It really is incredibly simple.) Let's get started… "Daddy, can you throw me, like you do in the pool?" my non-daredevil, eight-year-old daughter asked. "Sure," I said. And I did. But the pimply- faced Lake Lure lifeguard went nuts… Apparently, this is against the rules at the public beach here in Lake Lure, North Carolina. We were in chest-deep water, with a sand bottom that goes out for fifty yards. Nothing bad could happen. A minute or two passed. "Daddy, can I climb on your back?" "Sure," I said. And she did. Uh oh! The pimply lifeguard went nuts again. Apparently, little daughters on dads' backs are against the Lake Lure rules, too. I was surprised. There was no chance something could go wrong. She decided to get out of the water and go down the waterslide. Remember… she's no daredevil. Fortunately for her, this slide had no danger, other than the chance of a little water up your nose at the end. I started to walk into the water, to encourage her as she came off the slide for the first time. The lifeguards waved me off. "You can't be out here with us," they said. Well, OK then. I watched from the other side of the fence. We left soon after. Lake Lure charged our family a $50 entry fee to use this public beach. My $50 paid for those lifeguards to uphold Lake Lure's rules, it paid their bosses' salaries, and it paid whoever else sits around making up the rules. I remember traveling to Iceland a few years ago. I loved the freedom at public places… Look up "Geysir Iceland" on Google Images. You'll see people standing inches away from deathly hot water shooting straight out of the earth. No Lake Lure lifeguards there. Look up Gulfoss, an incredible waterfall. You can walk the rocks at Gulfoss, right to your death if you so choose. No guardrails or Lake Lure lifeguards there, either. There you have legitimate danger. You would die if you were foolish enough to go a couple feet too far. Though there are some fools out there, Icelanders give the rest of us the benefit of the doubt. People need to be free to soar… and free to fall on their faces. Falling down occasionally and getting back up again is part of being human. It just so happens that what is true for one man is true for all men… as Sir John Cowperthwaite of Scotland discovered. A half-century ago, the United Kingdom put Sir John in charge of Hong Kong. He found Hong Kong did well without government help. Legend has it, he even refused to collect economic statistics for fear the Brits would use them to determine what part of Hong Kong's society to "help." Hong Kong went from "a barren rock" to wealthier than Britain (per capita) by 1992. Sir John's secret? Do nothing… He spent a good portion of his time preventing British political "busybodies" from meddling in Hong Kong. He kept rules and regulations to a minimum. Your actions had potential rewards and potential consequences, as it should be. Tax rates in Hong Kong are among the lowest in the world. (The top rate is 15% on businesses and 16.5% on individuals, I believe.) There's hardly any social safety net by Western standards. But you know what? The unemployment rate is almost always low. It's currently 3.5%. Lake Lure has chosen the opposite path of Hong Kong. It's set up tons of rules. It's protecting people from themselves. And then it pays government people to enforce all the rules. How's that working out? North Carolina has a state income tax of more than 7% – beyond federal income taxes. The unemployment rate in Lake Lure is 16.6% (the most recent figure I could find). North Carolina could learn a thing or two from Sir John Cowperthwaite. Sir John knew fewer rules and less government intervention leads to fantastic prosperity over time. He learned it's incredibly difficult to maintain DOING NOTHING politically… keeping your hands off. But he proved it works. Not only could North Carolina learn a thing or two from Sir John Cowperthwaite … but so could nearly all our politicians in Washington… While I will enjoy our time in North Carolina, I look forward to getting back in the ocean at home… tossing my daughter and having her climb on my back… at no charge… with no Lake Lure lifeguards telling me what I can and cannot do… Good investing, Steve