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What If We Just… Shut It All Down?

By Charles Sizemore, Chief Investment Strategist, The Freeport Society

If I let them compute the GDP, they’ll want to manage it.

— Sir John Cowperthwaite, Financial Secretary of Hong Kong, 1961-1971

Following the end of World War II, the British Empire fell apart.

Its economy was wrecked and its manpower depleted.

The economics of colonial rule just no longer made sense. The juice was no longer worth the squeeze.

It was also a time of national self determination.

Tired of being mismanaged by the British colonial masters, the former subjects in Asia and Africa decided they wanted to mismanage themselves.

Hong Kong was the one hold out.

Decades after the British Empire broke apart, Hong Kong remained under British rule.

Rather than follow the mother country into the socialist abyss – which was all the rage at the time – Hong Kong remained a libertarian, free market utopia.

During the tenure of Financial Secretary Sir John Cowperthwaite (1961–1971), the colony adopted a staunchly laissez-faire economic model.

The government maintained low taxes, zero tariffs on nearly all goods, minimal regulation, and limited welfare. Market forces drove development.

Cowperthwaite even resisted collecting GDP data, fearing it would encourage economic intervention.

Hong Kong had no natural resources to speak of. It imported all of its energy. It lacked the surface area for large-scale farming, so it imported most of its food too.

It was a hardscrabble place with no obvious advantages.

And it was dirt poor, having been wrecked by Japanese occupation in World War II.

As late as the 1950s, Hong Kong’s GDP per capita was on par with sub-Saharan Africa.

And yet…

From 1961 to 1971, Hong Kong’s real GDP grew at an average annual rate of around 9% to 10%, fueled by manufacturing, an influx of skilled immigrants from mainland China, and integration into global trade networks.

To put that into context, a 3% growth year is considered fantastic in America. Hong Kong’s average was three times higher than a homerun year for us today.

The thing is, Cowperthwaite didn’t build Hong Kong into the financial powerhouse it eventually became.

He didn’t really do anything.

His greatest contribution was his remarkable restraint.

He resisted the urge to tinker, going so far as to limit his own access to economic statistics lest he be tempted to “do something” with the data.

He let the Hong Kongers get on with their lives, unbothered by the heavy hand of government. They took care of the rest.

It seems our politicians are hell bent on doing the exact opposite.

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Lessons NOT Learned from a Dying Empire

President Trump fired Erika McEntarfer, the head of the Bureau of Labor Statistics (BLS), last week.

The president claimed that the BLS has become politicized… that McEntarfer was intentionally trying to make him look bad by revising the May and June data to show that 258,000 fewer jobs were created.

That’s not the most farfetched accusation to come out of Washington. It’s far more believable than Jeffrey Epstein killing himself in prison and his client list magically disappearing.

Perhaps McEntarfer really does have it in for Trump.

But that obscures a far more important issue: Why in the hell are we depending on government statistics in the first place?

Seriously.

People drawn to government work are usually busybody tinkerers. They can’t leave well enough alone.

The idea that Adam Smith’s “invisible hand” will guide the economy better than the mandarins in Washington is something they cannot or won’t comprehend.

That’s generally true of policy wonks, career government employees and, yes, even presidents.

While Trump is theoretically a fan of deregulation, he’s one of the biggest micromanagers we’ve ever had in the White House.

He’s constantly meddling with tariff rates and haranguing the Fed to lower rates.

The BLS doesn’t publish a jobs report or the consumer price inflation (CPI) report for us.

The Bureau of Economic Analysis (BEA) doesn’t track GDP for us.

The Census Bureau doesn’t track retail sales for us.

These government agencies compile these reports to give the political caste justification to tinker… creating new problems that require even more tinkering.

It’s a vicious cycle.

If you want to fix this problem, you have to starve the beast.

Scrap the BLS… and the BEA. Hack the Census Bureau back down to its constitutionally mandated role of counting the number of Americans in order to allot congressional seats. Eliminate the Federal Reserve or at least massively reduce its power to tinker.

Hong Kong did it and it brought the country back to life.

Unfortunately, that’s never going to happen here.

How to Prepare for the Fallout

Trump will replace McEntarfer with someone more likely to deliver him economic news he wants to hear, regardless of its accuracy. And armies of government busy bodies will use that data to “fix” the economy.

There’s not a lot we can do about it as mere civilians.

But we can do our best to protect ourselves from the fallout of lower productivity, impossible to kill inflation, and a rapacious government in constant need of new tax revenues to pay for past promises.

If you haven’t done so already, buy a little gold and hide it somewhere safe.

To life, liberty, and the pursuit of wealth,

P.S. You can also be vigilant for opportunities to grow your wealth. One of the hottest investment topics of our lifetime is about to undergo a major shift. Freeport Society Co-Founder, Louis Navellier, explains what’s about to happen, and how you can get ready, in this urgent briefing.