Lessons to be re-learned: a review of ‘Heavens on Earth’ by JP Floru


This is a timely book. Economic freedom is under threat. In America, President Obama is waging war on wealth creators and is massively expanding the boundaries of the state. The European Union helps itself to the bank deposits of private individuals for the sole purpose of propping up a failing currency union whose popular support is fast vanishing. At home, the government’s efforts to reduce the deficit appear to have stalled in the face of repeated hysterical onslaughts from the left.

The world recently lost Margaret Thatcher, one of the great champions of economic liberty. The lessons of her premiership are clear: giving people economic freedom not only works, it’s moral, too. These lessons are timeless and apply to all nations. JP Floru’s book is subtitled ‘how to create mass prosperity for all’. Thatcher took giant strides towards this, probably more so than any other prime minister. This book is a fitting reminder of the principles for which Thatcher fought.

It is a particularly irritating cliché that there are no major political battles to be fought, that we’ve reached some sort of consensus. A ‘third way’, if you like. Nothing could be further from the truth and in his book JP Floru destroys this sort of cosy, managerial understanding. Through a series of case studies – Germany after World War 2, Singapore, China’s free market reforms – Floru shows how country after country has moved from crushing poverty to mass prosperity, often overcoming decades of authoritarian central planning, by following free market principles and setting their people free to produce and create wealth.

All the case studies are fascinating but my favourite is Hong Kong, partly because the rather unlikely heroes are British civil servants; a group that doesn’t normally get much loving from capitalists. The chapter on Hong Kong was nothing short of inspirational; the tale of how a tiny island (population of 2,000 in 1841) became one of the most prosperous and economically free places on earth.

The British administration, chiefly the Financial Secretary John Cowperthwaite, resisted numerous attempts by the motherland to impose socialism and regulation of the colony. The attempts were unsuccessful, as can be seen from the wonderfully minimal tax regime: 16.5 per cent flat rate of corporation tax, income tax of between two and 17 per cent (though numerous deductions such as mortgages and charitable giving mean most employees pay little or no tax). There are no import tariffs, no sales tax, no capital gains tax and no national insurance. Sign me up! Floru details one of the few areas where Hong Kong has not achieved such success – housing. Restrictive planning policies mean that two-thirds of Hong Kong are undeveloped. 40 per cent of the population are in receipt of social housing, subsidised by the government. As Floru comments, the Hong Kong government’s ‘interference in the property market is not just the one truly great exception to its general laissez-faire attitude, but also its one unmitigated disaster’.

Heavens on Earth doesn’t seek to offer a free market blueprint that politicians can take down from the shelf and blindly follow through to mass prosperity. However, I have picked out three general themes that seem common to most of the case studies presented in the book.

First, a government attempting to regulate an economy is like a novice attempting to fly a light aircraft. As one ham-fisted over-control in one direction leads to another and another, each yet more violent, until the aircraft enters into an irrecoverable spin, so one unnecessary regulation leads by the law of unintended consequences to another, and another, until an economy becomes suffocated by layer upon layer of red tape – through which only the sharpest of free market-knives can cut.

Secondly, special interests are the greatest threat to mass prosperity. Whether New Zealand farmers or trade unions in almost any country, special interests will lobby governments to introduce regulations favourable to their own cause, regardless of the overall effect on the economy. It’s impossible to state the danger of special interest groups without also stating the danger of politicians themselves, who will often make questionable decisions in pursuit of votes.

Finally, socialism cannot weather economic crises. Many of the countries Floru showcases had suffered years and years of stultifying left-wing control before coming up against sudden, devastating crises. An extreme example would be post-war Germany. A less extreme example would be the abuses of power by Chilean president Allende, culminating in a military coup d’etat. In all cases, socialism proves that it is nothing more than an unworkable fairy tale constructed from irrational wishful-thinking.

This is an excellent book, which I recommend. As many as possible need to read it because we must disabuse people of the notion that Britain is a capitalist country. It is not. But if we re-learn lessons that we once knew, lessons that Margaret Thatcher taught us and that are recounted in Heavens on Earth, Britain might yet become a capitalist nation and we would create prosperity for all.

The book can be bought via Biteback Publishing.

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