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					                                         Summer 2009
                                           Vol.1 No.2

Best Practice
A Public Policy Journal

rebuilding marketing institutions
Monetarism defiant
the language of leadership
Hong Kong and capital controls
combating the spread of fake medicines
Inside Best Practice
Vol. 1 N0. 2 Summer 2009

                                                      20 the Language of                                Leader’s Bookshelf
                                                                                                        45 For sleuthing amateurs
                                                              ron Manners honours sir arvi                       of economics
                                                              Parbo for his service and comments                 the economic Naturalist reviewed
                                                              on the way forward, not only for                   by Michael Mo.
                                                              australia, but for all others on the
                                                                                                        46 Privatization Bears Fruit
                                                      Policy Recommended for the                                 in the Big apple
                                                      Market                                                     Privatization in the city reviewed by

5                                                     26 the Privatization of
                                                                                                                 Lawrence W. reed.
        From the editor
                                                              Public services                           Odds and Ends
6       From the Founders                                     John L. chapman on why
                                                                                                        48 Master of slaves
7       contributors
                                                              privatization is indeed the only hope
                                                              for renewal of once proud cities.
                                                                                                                 Jackie chan has declined the value
                                                                                                                 of freedom to show his obedience.

Cover Story                                           34 Hong Kong and capital 50 Patriotic Panic
8       rebuilding Market                                controls
                                                              Jim Walker questions the controls in
                                                                                                                 a low flying plane spotted in
        institutions after the                                the betting arena.
                                                                                                                 Manhattan causes panic.
        Financial crisis
        Bill stacey navigates financial risk          Global Perspective Policy                         52 Let’s Not Lose Our
        and regulatory changes and throws
                                                      Analysis                                                   Minds
                                                      37 combating the spread
        us a ladder to climb out of the
                                                                                                                 the mass hysteria surrounding the
                                                                                                                 spread of swine flu does little to

Policy Recommended For The
                                                              of Fake Medicines                                  protect us.

                                                              through Free Markets
                                                              and self-interest
14 Origins of the Financial                                   Julian Harris and alec van Gelder
                                                              trail counterfeit medicines and
        Market crisis of 2008                                 suggest systems to help china shed
        anna J. schwartz suggests how to
                                                              its “Factory asia” label.
        avoid a replay of the factors that
        produced the credit market debacle.
                                                      Around The World
17 Monetarism Defiant                                 42 restoring the Freedom
        Guy sorman on legendary economist                     to trade
        anna schwartz – the feds have                         alec van Gelder on the Freedom to
        misjudged the financial crisis.                       trade campaign’s importance.

 Editor: Nicole idanna alpert                          editorial Office:                                article submissions:
 Executive Director: Peter Wong                        room 1207 Kai tak commercial Building            all articles submitted to Best Practice must be
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 Practice do not necessarily reflect the views of                                             
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                                                                                                        our website,, or inquire.

                                                                                                                                               Summer 2009             3
From the Editor
 Fancy More regulation?

          he movement to increase regulation in order          Our cover story,
          to rebuild the economy has a large following.     “rebuilding Market
          at the same time, however, it is well known       institutions after the
 that some of the very regulations enacted years ago        Financial crisis,” by Bill
 with the support of this movement backfired, playing       stacey, explores financial
 a large role in the formation of the crisis. Knowing       risk and regulatory changes while addressing
 which regulations and policies to alter or roll-back is    numerous areas to suggest what shape reforms
 proving to be elusive, and committing to one school        should take. anna schwartz helps us move forward
 of thought amidst this confusion is worrisome.             by understanding the past as she explains the factors
     Many new policies have been considered for             of the crisis and the expansive monetary policy under
 regulatory change under the auspices of now                the last U.s. administration. Notably, this section,
 knowing better. But do policymakers really                 Policy recommended for the crisis, indicates that
 understand the outcomes of past policy and                 allowing regulations, and the risks involved with
 regulatory change – those that had admirable goals         them, to play a larger role than the current market
 but turned out to be some of the main drivers of           devices themselves is too big a risk to take.
 the crisis? the cra regulation, while only one                John chapman opens our Policy recommended
 chapter of the tragedy, is notable because its impact      for the Market section with “the Privatization of
 was large enough to set the scene by lowering              Public services,” in which he details two cities’
 lending standards across the board. its policy effect      government activity compared to that ascribed to
 was detrimental: banks moved away from a focus             markets. chapman debates that the outcome of cities
 on hard credit standards and other institutions            like Detroit is far from inevitable; the real reason for
 proceeded similarly. this whole array of government        their failure is a greater size of government coupled
 policies to encourage home ownership vastly                with a lack of competition for public services and
 distorted the financial system, adding fuel to the fire.   high taxes.
     an illogical assumption, but still widely held,           Jim Walker uncovers a betting arrangement of
 is that government agencies are able to “correct           suspect form in “Hong Kong and capitol controls”
 market failure” despite their bad track records. the       where people in Hong Kong are virtually banned
 thought of a bewildered-empowered tinkering again          from betting and watching horse races overseas.
 with financial products and policy (at some points,        Best Practice’s Global Perspective Policy analysis
 without having even understood what is up for              returns with Julian Morris’ and alec van Gelder’s
 legislation) is the stuff of nightmares. and yet, it’s     “combating the spread of Fake Medicines.” Both
 our reality today, as improvident home-ownership           fascinating and helpful, they suggest policies that
 policies were years ago.                                   provide easy and counterfeit-proof systems to make
     We should be wary of new regulations and rules         all pharmaceuticals safer.
 when the political environment lacks necessary                Leader’s Bookshelf reviews enjoyable and
 knowledge or endeavors to promote political goals.         influential books and for further enjoyment, Odds
 We should be wary when what’s actually happening           and ends closes this issue with a very entertaining
 in markets and businesses is being overlooked.             round-up of international happenings.
 after all, the readiness to pass new laws undermines          We’ll meet again next season, but until then, let
 the rule of law in the first place, which is why this      me know what you are thinking – you can reach us
 summer’s issue of Best Practice: “Less is More”            at
 is dedicated to monetary policy and financial
 regulations.                                                                             Nicole Idanna Alpert

                                                                                                          Summer 2009   5
    From the Founders
      On Where Hong Kong is Headed

               he second issue of Best Practice comes at            recovering teenage addicts and the unskilled elderly
               you at a pivotal time in Hong Kong’s history.        are kept from gainful employment. For the young,
               While the fallout of the financial crisis is still   never working leads to a life of indolence and crime.
      having far reaching impacts on our city, we seem              On the rare occasion they find work, they find
      to be seeing through this crisis and already looking          it unfamiliar and irksome. in europe and North
      beyond. While the financial realm is of course                america, those who would clean the streets at a
      important, it oft seems that the greatest threats to          lower than minimum wage instead make those streets
      our success come from within.                                 dirty with crime and despair.
         Hong Kong is consistently ranked the freest                    For the elderly and unskilled, being replaced by a
      economy in the world, but those living in Hong                less expensive camera from their night watchman job
      Kong are only too aware of when the government                robs them of their ability to contribute to people’s
      intervenes. sometimes the results are comic – like the        safety and well-being – and their dignity arising from
      recent decision and hopeful reversal not to license           a job done with honour. the elderly of the West are
      shoe shiners. the question has to be asked: Whose             often living quiet lives of desperation, rather than
      idea was it to require shoe shiners to get a license          working with pride in later years like those in Hong
      anyways? are there concerns about unlicensed                  Kong.
      shoe shiners over-buffing patrons’ shoes to an                    the elderly, yet vibrant men, working the alley
      unsightly sheen? Or if we didn’t restrict the numbers,        behind shanghai tang are the frontline potential
      shoe shiners would take over the city with their              victims of labour restriction that would rob them of
      pernicious…stools and buffing rags?                           their pride. Will we replace it with welfare and the
         No doubt there are mid-level bureaucrats earning           message that their usefulness to the world is done?
      a decent living off of licensing the absurd. in this          By introducing minimum wage, will we do the same
      case, it is certain they live better than those whose         to young men who are just beginning life, without
      humble livelihood they would seek to extinguish. to           the full benefit of education? imagine the impact on
      those dutifully keeping Hong Kong’s leather bright,           these valuable young people who, while not meshing
      this is no joke however, but rather a theft of their          with our rigid education system, can still make an
      honest work and dignity that goes with it.                    honest contribution to the world.
         More far reaching in its impact is the proposal for            Policy has real impact on real lives. this is the
      a minimum wage. the economic arguments against it             motivation behind the founding of Best Practice.
      are well known and feared by workers on the edge of           Hopefully we can use it to find a better way, a Hong
      employment and employers on the edge of survival.             Kong way, and not repeat the mistakes of the so-
      Less understood is the moral damage of it.                    called “advanced” economies. Hong Kong’s way has
         While the impact of government intervention                been a better way for many years. We should not be
      seems obvious to us here, you have to experience it           shy to use the world’s best practice – but also create
      in social democracies to really see why Hong Kong             it, so the world may follow in our footsteps.
      ranks so well. restrictive labour laws, of which
      minimum wage is a starting point for a tsunami                                             Simon Lee Chao-fu
      of red tape, keep those with the most to gain from                                     Andrew Shuen Pak-man
      honest labour out of the workforce. school dropouts,                                           Andrew Work

6   Best Practice

Bill Stacey                   Anna J. Schwartz               Guy Sorman                     Ron Manners                  Jim Walker                   John L. Chapman
the chairman of Hong          One of the world’s             French professor,              a fourth generation          the founder and              an adjunct scholar in
Hong’s leading free           greatest monetary              columnist and author. He       prospector with over 40      managing director of         economics, working at
market think tank, the        scholars. With her             has written twenty books       years of experience in       asianomics Limited, an       aei under the auspices
Lion rock institute.          expertise on banking           that preach the ideals of      the mining industry in       economic research and        of the National research
He is also on the Board       and money analysis, she        creativity and modern          Wa. He is chairman of        consultancy company.         initiative where he
of advisors of the            became the president of        capitalism. His ideas          the Mannwest Group of        Prior to establishing        researches and writes on
Mannkal economic              the Western economic           about renewable energy         private companies, and       asianomics in December       the history and impact of
education Foundation.         association. she also          and environmentalism in        is also the Managing         2007, he was the chief       private equity investment
Professionally, Bill          published a book with          his book Progress and its      Director of Mannkal          economist at cLsa            on the U.s. economy.
has been an executive         Milton Friedman, A             Enemies are particularly       economic education           asia-Pacific Markets.
with leading financial        Monetary History of the        controversial. He is           Foundation, an               He was voted best
institutions in asia and      United States, which was       currently working on a         educational foundation.      regional economist by the
globally. He is currently a   very influential. at the       book on economy as a           He is currently working      asiamoney stockbrokers
partner in boutique equity    age of 93, she is still with   science.                       on his next book entitled    Poll between 1994 and
house, aviate Global.         the National Bureau of                                        Heroic Misadventures.        2004 as well as frequent
                              economic research and is                                                                   number one rankings in
                              one of the most prominent                                                                  the private Greenwich
                              economists there.                                                                          surveys of fund managers
                                                                                                                         in asia, europe and

Alec van Gelder               Julian Harris                  Michael Mo                     Lawrence Reed                Eugenio Suarez               Anuj Jhunjhunwala
Project Director of the       a research Fellow at           in his final year of studies   served as Mackinac           currently an economics-      a junior at columbia
trade and Development         international Policy           at city University of Hong     center for Public Policy’s   Philosophy major at          University in New
Programme at                  Network, a think tank          Kong. His experience           President, a Midland-        columbia college and         York city, majoring
international Policy          based in London. He            campaigning for Barack         based research and           is also the treasurer for    in economics-Political
Network, a think tank         works on international         Obama in america               educational institute,       the student Governing        science. He interned
based in London.              health policy and has          inspired him to attempt        for its first two decades    Board. eugenio co-founded    in the Louisiana state
His work on trade,            recently authored              to apply similar campaign      starting from 1987.          the University chapter       Governor’s Office where
health, technology and        articles on counterfeit        strategies in Hong Kong.       at age 55, he became         of the cuban american        he researched the effects
development issues has        and substandard drugs          Michael is a native of         president emeritus of the    Foundation. He interned      of federal legislation on
been published in many        published in many              Hong Kong and is fluent        center. On september         with congresswoman           elderly welfare recipients
news outlets. alec holds      outlets. Last month iPN        in Putonghua. He is also       1, 2008, reed assumed        ileana ros-Lehtinen and      living on Medicare. He
a Master’s degree in          launched his paper on the      one of the editors of          the presidency of the        was an editor for the        is vice-president of the
international economics       topic: “Keeping it real:       idea4HK think tank and is      Foundation for economic      columbia Political review.   columbia University
and Development from          combating the spread           currently working at the       education, headquartered     He is a native of Miami      south asian club and
UcL in Belgium and            of fake drugs in poor          Lion rock institute for        in irvington, New York.      and fluent in spanish.       active in the rotoract
speaks english, spanish,      countries.”                    the summer.                                                 eugenio is currently a       service club. anuj also has
French and Dutch with                                                                                                    research assistant in        a good command of Hindi
fluency.                                                                                                                 the Barnard economics        and is a native of Baton
                                                                                                                         Department and working       rouge. He is currently
                                                                                                                         at the Lion rock institute   working at the Lion rock
                                                                                                                         for the summer.              institute for the summer.

                                                                                                                                                        Summer 2009                 7

     Master of slaves
     Jackie Chan has declined the value of freedom to show his obedience

            f the chinese nation should be          the intention of Jackie to deliver   political power.
            controlled, so should Jackie.       such a speech is obvious – to               so Jackie, the people of china
                From Jackie’s definition of     please Beijing. When the central         should be controlled? Let’s
            “too much freedom,” he’d            administration has been pushing          hypothesize and instate some new
     probably be happiest as the newest         hard for “harmonized governance,”        controls. say we make extramarital
     citizen of Pyongyang.                      it is certain that Jackie would like     affairs illegal
         in a pluralistic society, there must   to portray himself as tuned-in.          and those who
     be clashes between ideologies and          ironically, his latest film, shinjuku    are found guilty
     it is all about give and take among        incident, has been banned for            should be insulted
     various interest groups. Jackie            screening in the Mainland because        in tiananmen
     upset many chinese people with his         it does not “harmonize enough.”          square. if so, i
     words, and i suppose he hasn’t yet         Ultimately, it is Jackie’s right to      bet Jackie will
     experienced the peaceful transition of     please an authority for political        turn himself
     power between Labor and Liberals           convenience and ruin his pocket.         into a complete
     in the land down under (no wonder          Giving up his freedom is his right       aussie.
     his house near canberra has been           even though it philosophically
     burned out).                               appears unjust to become a slave of a    Michael Mo, Hong Kong


48   Best Practice
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     Patriotic Panic
     A low flying plane spotted in Manhattan causes panic

                   n april 27, 2009, a     Well, that settles it – no need to        the Mayor of New York was an
                   Boeing 747 and two      panic. i’m sure all the folks with post   astute political maneuver – override
                   F-16s were spotted      traumatic disorder after 9-11 will be     the competition. Not allowing
                   flying in Manhattan     enchanted to see patriotic images of      citizens without proper clearance
     near the site of one of the most      the President’s private 747 soaring by    to view these photos is a bold and
     catastrophic terrorist attacks on     the statue of Liberty. Yes, wave your     commendable stab at eradicating
     american soil. Panic ensued.          flags and let us rejoice!                 terrorism. and finally, we thank you
        everyone must wonder: there           Pardon me? Most of these pictures      Mr. President for the mysterious
     must have been sound reasoning        are classified? Well, it must be an       resignation of Louis calder, the
     to support this perceived assault.    issue of national security. We must       Director of the White House Military
     surely it was a well planned event    not succumb to our emotions. if           Office. this shows that the Obama
     for a practice evacuation? Or maybe   those sensitive photos fall into the      administration will not accept nor
     it was to check New York city’s       hands of evil terrorists our safety       condone errors of judgment.
     emergency response time? Or, i        would be in great peril.                      By the way, for the photos that
     don’t know, maybe the Obama              i am glad that the U.s. President,     were released – they could use some
     administration “needed to update      Barack Hussein Obama, and his             Photoshopping.
     their photo files”?                   administration have taken charge of
        a photo op for air Force One?      the situation. First, failure to inform   Eugenio Suarez, New York

                                                                                                                            illustration: Bay Leung

50   Best Practice

     Let’s Not Lose Our Minds
     The mass hysteria surrounding the spread of swine flu does
     little to protect us


                                                                                                                               illustration: Bay Leung
                   all it “swine flu,”
                   “Mexican flu,”
                   “H1N1,” or even “new
                   flu” – whatever you
     call it, just be sure to pick a name
     that ensures complete chaos and
     fear amongst the general populace.
     after being labeled as a pandemic
     by the WHO earlier this year, the
     disease has fomented paranoia and
     confusion wherever it has spread
     – with ridiculous consequences. in
     april, the egyptian government,
     afraid that its constituents may
     contract the disease by eating swine,
     slaughtered nearly 300,000 pigs
     despite a clear lack of evidence
     that any of these pigs carried the
     disease. as of this article, china and
     russia have yet to lift import bans
     on american pork products. even
     U.s. Vice President Joseph Biden         Walk around Hong Kong for a              major cities, it is easy to see why
     got into the mix, stirring up the        couple of hours and it is easy to see    even the most harmless of coughs
     paranoia by exhorting americans to       such fear: stores proudly proclaim       would send an entire restaurant of
     avoid enclosed spaces like trains and    that they “disinfect door handles        people running out the door.
     airplanes. Biden said that given the     every 3 hours,” people walk around          Here’s a thought: don’t go crazy.
     circumstances, americans should          wearing flimsy face masks that have      Yes, take your precautions against
     completely avoid all crowded,            been proven ineffective in preventing    the disease. Wash your hands
     confined areas. a stimulus to the        the spread of viral, airborne diseases   regularly and cover your nose and
     economy that would have been, for        (sars redux, anyone?), and there         mouth when you sneeze. Go to the
     sure.                                    have been instances in which entire      doctor if and when you feel sick. But
        the misinformation surrounding        planeloads of people have been           for the sake of humanity, just drink
     the spread of swine flu (now referred    quarantined because of a single          the corona already. it’ll be good for
     to as “H1N1” by the WHO and by           traveler’s innocuous sneeze.             you.
     major media outlets) has seemingly          With this kind of paranoia
     permeated all aspects of society.        rampant throughout the world’s           Anuj Jhunjhunwala, New York

52   Best Practice

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