People From Edinburgh

"Cowperthwaite was brilliant, well-trained in economics, suffered no fools, and was highly principled. He wouldn't last five minutes in a similar post in Britain, since he was no predisposed to compromise any of his principles - only the constitutional structure of Hong Kong allowed him that power."

"One of the things that most surprises me about my honourable Friend’s remarks is that he characterizes his proposal for state intervention in, and control of, industry as “innovation and a spirit of adventure” and condemns free private enterprise as “prosaic precedent”. This is a strange paradox. I would put it precisely the other way round. What he advocates is based on the “prosaic precedent” of many of our rivals who have to resort to wooing industry with artificial aids and have had remarkably little success at it. Recent events have shown that enterprising spirits still prefer our economic freedom to the restrictive swaddling clothes offered elsewhere. Possibly I am a romantic in this but I, for one, do not believe that our spirit of adventure is in need of artificial stimulation — nor do I believe that we can afford the wasteful application of our scarce resources which they would entail—we are neither desperate enough, nor rich enough, for such expedients to make economic sense. It is, of course, all the fashion today to cry in any commercial difficulty, “why doesn’t the Government do something about it”. But I would rather go back to the old days when even the most modest attempt by Government to intervene in commerce and industry was rudely rebuffed."

"You always had the feeling that Cowperthwaite was looking over your left shoulder. You knew that he would ask at least five questions about any proposal that was submitted."

"We enjoy a considerable net inflow of capital and I am sure that a condition of its coming, and staying, is that it is free to flow out again. It is also important for Hong Kong's status as a financial centre that there should be a maximum freedom of capital movement both in and out."

"I am also, I must confess, a little sceptical of the theory that we have a right, if we could, to pass on our capital burden to future generations. I remarked last year in this context that our predecessors had not passed any significant part of their burden on to us."

"I should like to begin with a philosophical comment. I do not think that when one is speaking of hardships or benefits one can reasonably speak in terms of classes or social groups but only in terms of individuals."

"One trouble is that when Government gets into a business it tends to make it uneconomic for anyone else."

"Over a wide field of our economy it is still the better course to rely on the nineteenth century's "hidden hand" than to thrust clumsy bureaucratic fingers into its sensitive mechanism. In particular, we cannot afford to damage its mainspring, freedom of competitive enterprise."

"I will not be proposing a course which has been under some public discussion recently — deficit financing. It is wholly inappropriate to our economic situation. In its least extreme form it is based on the theory that additional money generated by a Government deficit (and given currency, as necessary, by use of the printing press) will stimulate consumption and thereby production, in time to match the excess money with goods before real inflationary harm is done. Unfortunately we don't, and can't, produce more than a small fraction of what we consume, and increased consumption would merely mean increased imports without matching exports; and a severe balance of payment crisis, which would destroy Hong Kong's credit and confidence in the Hong Kong dollar; and which we could not cure without coming close to ruining ourselves. Keynes was not writing with our situation in mind. In this hard world we have to earn before we spend."

"Economists of the modern school will no doubt protest that I have said nothing of the use of budget deficits or surpluses for the control of the economy in general. I doubt if such techniques would ever be appropriate in Hong Kong's exposed economic position; and I think they are certainly not appropriate at present, when in strict orthodoxy they would suggest the need to plan for a very substantial surplus "to take the heat out of the economy". Although we have in fact run substantial surpluses in recent years we have not done so with deflationary effect because we have not removed them from the economy but have left them inside the Colony's banking system to continue to work for the economy. $500 million or 55% of reserves are so held at present."

"The fact that previous generations have handed down to us a substantial public heritage by way of roads, port, etc. almost completely free of debt, seems to me to impose some limitation on the validity of the theory that by borrowing we should, or could, pass on the burden of development to the next generation."

"I am confident, however old-fashioned this may sound, that funds left in the hands of the public will come into the Exchequer with interest at the time in the future when we need them."

"An infant industry, if coddled, tends to remain an infant industry and never grows up or expands."

"Official opposition to overall economic planning and planning controls has been characterized in a recent editorial as "Papa knows best". But it is precisely because Papa does not know best that I believe that Government should not presume to tell any businessman or industrialist what he should or should not do, far less what he may or not do; and no matter how it may be dressed up that is what planning is."

"Money cannot be converted into houses or trained teachers or hospitals at the touch of a magic wand. There are limitations to our physical and intellectual resources."

"I would suggest to my honourable Friend that the foreign investor is at least as discouraged by high national debt for that, as all example shows, is the surest precursor of high taxation."

"One of these is an increasing awareness of the benefits to our economy, particularly in terms of investment and enterprise, both local and from overseas, of not having the inquisitorial type of tax system inevitably associated with a full income tax. Another is that even I, who have always believed in the vigour of our economy under our present tax regime, have been surprised by the growth of revenue generated at our present tax rates."

"A glimmer of light is better than no illumination at all."

"Revenue has increased in this way is in no small measure, I am convinced, due to our low tax policy which has helped to generate an economic expansion in the face of unfavourable circumstances"

"Deficit financing proper is rather the process whereby a Government spends more money that it withdraws from the economy by taxation, borrowing, running down reserves, etc.; thereby causing in most circumstances, and very acutely in ours, monetary inflation and severe pressure on the balance of payments."

"Simply put, money comes here and stays here because it can go if it wants to go. Try to hedge it around with prohibitions, and it would go and we could not stop it; and no more would come."

"My own views on all matters of public revenue and public expenditure are conditioned by an acute appreciation of whose is the sacrifice that produces public revenue and to whom accrues the benefit of public spending."

"I largely agree with those that hold that Government should not in general interfere with the course of the economy merely on the strength of its own commercial judgment. If we cannot rely on the judgment of individual businessmen, taking their own risks, we have no future anyway."

"I still believe that, in the long run, the aggregate of the decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is likely to do less harm than the centralized decisions of a Government; and certainly the harm is likely to be counteracted faster. As I said earlier in this debate, our economic medicine may be painful but it is fast and powerful because it can act freely."

"I have three objections to my honourable Friend’s wider proposal that exchange control powers be used to require the fixing of exchange by merchants on entering into both export and import contracts. The first is that I think it excessively paternalistic to require a merchant to protect himself against a risk he is prepared to take. Secondly, I think it wrong to impose a condition which is likely to cause one group of merchants a loss, for the purpose of providing the other group with protection at no cost to them. Thirdly, I do not think it is in fact practicable to enforce such a system. I am sorry to be so negative, but I am sure that the solution to my honourable Friend’s problem should not depend on compulsion but on the provision of voluntary protection on insurance principles."

"It seems to me that we have three choices; first, public services of high standard and cost but of limited scope, leaving unfilled a substantial part of the present gap, not necessarily benefiting those in real need and benefiting many who are not in need at all (this has been our historical approach); second, public services to meet the requirements of all, with the beneficiaries making a contribution by way of fee according to their means, and with adequate provision for complete remission in suitable cases; or third, universal public services provided for rich and poor alike on terms the poorest can afford; that is, the welfare state where all benefit and the whole cost is met by the taxpayer in general. I think it is well-known that I am an advocate of the second approach."

"I am afraid that I do not believe that any body of men can have enough knowledge of the past, the present and the future to establish “development priorities” — which presumably means procuring some developments as being good and prohibiting others as being bad."

"Many of our services cost more than do similar services in Europe, because, although we have a substantial quantitative deficiency of public services, the decision-takers and policy-makers, both inside and outside Government as I have said before today, being themselves from the better-off (to use a popular euphemism) sectors of our society, not only demand the highest standards of provision of public services to meet what they consider their own essential needs (for example, in public car parks); but also find it difficult to think of provision for the rest of the population in terms of standards relative to our real total resources."

"If one accepts that in general social services should be made available to all on the basis of ability to pay, one has the choice of two opposite principles of action, although they need not be mutually exclusive—either progressive taxation and free services or fees covering costs with remission for those who cannot afford them. The former method is appropriate, in my view, in rich developed countries where the principle of progressive taxation can be applied without unduly adverse economic or social results, and the wastes inherent in full and free services can be afforded. In less advanced or poorer countries, where neither economy nor society is geared to progressive taxation and waste cannot be tolerated, fees remittable in case of need seem to me clearly more appropriate."

"Again she plunges! hark! a second shock Bilges the splitting vessel on the rock; Down on the vale of death, with dismal cries, The fated victims shuddering cast their eyes In wild despair; while yet another stroke With strong convulsion rends the solid oak: Ah Heaven!—behold her crashing ribs divide! She loosens, parts, and spreads in ruin o'er the tide."

"With living colours give my verse to glow: The sad memorial of a tale of woe!"

"Thou living ray of intellectual fire."

"High in his chariot glow'd the lamp of day."

"The sacred lamp of day Now dipt in western clouds his parting ray."

"We have... used the word stress to denote the mutual action between two portions of matter. This word was borrowed from common language, and invested with a precise scientific meaning by the late Professor Rankine to whom we are indebted for several other valuable scientific terms."

"Hypothesis Of Molecular Vortices. In thermodynamics as well as in other branches of molecular physics, the laws of phenomena have to a certain extent been anticipated, and their investigation facilitated, by the aid of hypotheses as to occult molecular structures and motions with which such phenomena are assumed to be connected. The hypothesis which has answered that purpose in the case of thermodynamics, is called that of "molecular vortices," or otherwise, the "centrifugal theory of elasticity. (On this subject, see the Edinburgh Philosophical Journal, 1849; Edinburgh Transactions, vol. xx.; and Philosophical Magazine, passim, especially for December, 1851, and November and December, 1855.)"

"It is possible to express the laws of thermodynamics in the form of independent principles, deduced by induction from the facts of observation and experiment, without reference to any hypothesis as to the occult molecular operations with which the sensible phenomena may be conceived to be connected; and that course will be followed in the body of the present treatise. But, in giving a brief historical sketch of the progress of thermodynamics, the progress of the hypothesis of thermic molecular motions cannot be wholly separated from that of the purely inductive theory."

"Science Of Energetics. Although the mechanical hypothesis just mentioned may be useful and interesting as a means of anticipating laws, and connecting the science of thermodynamics with that of ordinary mechanics, still it is to be remembered that the science of thermodynamics is by no means dependent for its certainty on that or any other hypothesis, having been now reduced, to a system of principles, or general facts, expressing strictly the results of experiment as to the relations between heat and motive power. In this point of view the laws of thermodynamics may be regarded as particular cases of more general laws, applicable to all such states of matter as constitute Energy, or the capacity to perform work, which more general laws form the basis of the science of energetics, — a science comprehending, as special branches, the theories of motion, heat, light, electricity, and all other physical phenomena."

"In treating of the practical application of scientific principles, an algebraical formula should only be employed when its shortness and simplicity are such as to render it a clearer expression of a proposition or rule than common language would be, and when there is no difficulty in keeping the thing represented by each symbol constantly before the mind."

"[T]he symbols of algebra, when employed in abstruse and complex theoretical investigations, constitute a sort of thought-saving machine, by whose aid a person skilled in its use can solve problems respecting quantities, and dispense with the mental labour of thinking of the quantities denoted by the symbols, except at the beginning and the end of the operation."

"In theoretical science, the question is—What are we to think? and when a doubtful point arises, for the solution of which either experimental data are wanting, or mathematical methods are not sufficiently advanced, it is the duty of philosophic minds not to dispute about the probability of conflicting suppositions, but to labour for the advancement of experimental inquiry and of mathematics, and await patiently the time when they shall be adequate to solve the question."

"But in practical science, the question is—What are we to do?—a question which involves the necessity for the immediate adoption of some rule of working. In doubtful cases, we cannot allow our machines and our works of improvement to wait for the advancement of science; and if existing data are insufficient to give an exact solution of the question, that approximate solution must be acted upon which the best data attainable show to be the most probable. A prompt and sound judgment in cases of this kind is one of the characteristics of a Practical Man in the right sense of that term."

"In this branch of study exactness is an essential feature; and mathematical difficulties must not be shrunk from when the nature of the subject leads to them."

"The ill-success of the projects of misdirected ingenuity has very naturally the effect of driving those men of practical skill, who, though without scientific knowledge, possess prudence and common sense, to the opposite extreme of caution, and of inducing them to avoid all experiments, and to confine themselves to the careful copying of successful existing structures and machines; a course which, although it avoids risk, would, if generally followed, stop the progress of all improvement. A similar course has sometimes... been adopted by men possessed of scientific as well as practical skill: such men having, in certain cases, from deference to popular prejudice, or from a dread of being reputed us theorists, considered it advisable to adopt the worse and customary design for a work in preference to a better but unusual design."

"The ascertainment and illustration of truth are the objects; and structures and machines are looked upon merely as natural bodies are; namely, as furnishing experimental data for the ascertaining of principles and examples for their application."

"Another evil, and one of the worst which arises from the separation of theoretical and practical knowledge, is the fact that a large number of persons, possessed of an inventive turn of mind and of considerable skill in the manual operations of practical mechanics, are destitute of that knowledge of scientific principles which is requisite to prevent their being misled by their own ingenuity. Such men too often spend their money, waste their lives, and it may be lose their reason in the vain pursuits of visionary inventions, of which a moderate amount of theoretical knowledge would be sufficient to demonstrate the fallacy ; and for want of such knowledge, many a man who might have been a useful and happy member of society, becomes a being than whom it would be hard to find anything more miserable. The number of those unhappy persons — to judge from the patent-lists, and from some of the mechanical journals — must be much greater than is generally believed."

"The most absurd of all their delusions commonly called the , or to speak more accurately, the inexhaustible source of power—is, in various forms, the subject of several patents in each year."

"Some of the evils which are caused by the fallacy of an incompatibility between theory and practice having been described, it must now be admitted, that at the present time those evils show a decided tendency to decline. The extent of intercourse, and of mutual assistance, between men of science and men of practice, the practical knowledge of scientific men, and the scientific knowledge of practical men, have been for some time steadily increasing; and that combination and harmony of theoretical and practical knowledge—that skill in the application of scientific principles to practical purposes, which in former times was confined to a few remarkable individuals, now tends to become more generally diffused."

"The third and intermediate kind of instruction, which connects the first two... relates to the application of scientific principles to practical purposes. It qualifies the student to plan a structure or a machine for a given purpose, without the necessity of copying some existing example, and to adapt his designs to situations to which no existing example affords a parallel. It enables him to compute the theoretical limit of the strength or stability of a structure, or the efficiency of a machine of a particular kind—to ascertain how far an actual structure or machine fails to attain that limit—to discover the cause of such shortcomings—and to devise improvements for obviating such causes; and it enables him to judge how far an established practical rule is founded on reason, how far on mere custom, and how far on error."

"The evil influence of the supposed inconsistency of theory and practice upon speculative science, although much less conspicuous than it was in the ancient and middle ages, is still occasionally to be traced. This it is which opposes the mutual communication of ideas between men of science and men of practice, and which leads scientific men sometimes to employ, on problems that can only be regarded as ingenious mathematical exercises, much time and mental exertion that would be better bestowed on questions having some connection with the arts, and sometimes to state the results of really important investigations on practical subjects in a form too abstruse for ordinary use; so that the benefit which might be derived from their application is for years lost to the public; and valuable practical principles which might have been anticipated by reasoning, are left to be discovered by slow and costly experience."