It turned out, however, that Shanghai's fall was Hong Kong's gain. For while these refugees brought no money, they did bring something more precious: skills, knowledge, and a willingness to work. In almost no time at all, they proved to be the impetus for Hong Kong's first wave of industrialization. Not only did Hong Kong survive, it blossomed, and it did so despite the severe blow dealt by the loss overnight of its largest market, China, to a U.N. trade embargo imposed during the Korean War. <...>
There is much to that. Much of Hong Kong's takeoff occurred simply because the colonial government had neither the will nor the resources to attempt too much. In fairness to the authorities, however, Hong Kong did benefit from a bureaucracy with enough horse sense to realize that the best thing to do with the Cantonese was get out of their way. If that legacy has carried over today it is largely the result of one towering figure: John James Cowperthwaite, financial secretary from 1961 to 1971 and de facto author of Hong Kong's budgets for a good part of the 1950s. Under Cowperthwaite's invisible hand, industrial wages doubled, exports grew at an average 13 percent each year, and the percentage of households in acute poverty shrank from more than 50 percent to 16 percent.
Not that Hong Kong didn't have its share of leaders constantly pushing pet schemes and preferential programs to develop the colony's manufacturing or trade. But Cowperthwaite's de facto control of the purse strings, his insistence that a place as small as Hong Kong could not afford to bet wrong, and--just as critical--his ability to defend this position intellectually in debate resulted in what was, for at least a short period, the freest economic experiment in world history. So scrupulous was Cowperthwaite about keeping government's role to a minimum that there is still no official recording of Hong Kong's national wealth for many of the years he was in charge. When I asked him about this years later he said it was deliberate. "If I allowed people to keep statistics," he told me, "they would only misuse them."