The GOP Debate: What Candidates Showed The Most Wisdom On World Affairs?

Por Alejandro Chafuen: Publicado el 7/8/2015 en:

It’s true that the economy of the United States—which represents between 16 and 17 percent of the global economy—is of tremendous importance for the rest of the world. But with 80 percent of the world’s production being created beyond our borders, those aspiring to lead the country can’t neglect the foreign scene. Most candidates answered questions about the three difficult “I” topics: immigration, ISIS, and Iran. China and Russia also appeared in the discussions. Mexico was mentioned mostly on the immigration front and, briefly by Donald Trump, as a competitor—but not as the important trade partner that it is. What was not discussed is also relevant to understanding how key players in the United States see the world scene. The debate did not include discussions on trade and monetary issues. The trade pacts with Europe and the countries in the Pacific are not moving forward due to distrust more than to anti-trade feelings. Trade, even if the administration can’t move forward, is not moving backwards. In the monetary arena, the U.S. dollar has strengthened considerably against the Euro, gold, and many commodities, especially oil. Today the U.S. dollar is 20 percent stronger against the Euro and gold than one year ago, and buys twice as much oil than a year ago. The only purely economic topic addressed—with implications for the world economy—is the 18 trillion dollar debt. Much of that money is owed to foreigners and foreign governments. While Sen. Ted Cruz and Dr. Ben Carson focused on the destructive potential of this debt and cited it as an example of the betrayal of voters’ trust, Sen. Rand Paul connected the debt to one of his foreign policy stances: “Do you borrow money from China to send it to anyone? Out of your surplus, you can help your allies, and Israel is a great ally. And this is no particular animus of Israel, but what I will say, and I will say over and over again: we cannot give away money we don’t have. We do not project power from bankruptcy court. We’re borrowing a million dollars a minute.” Looking beyond economics, the absence of questions on Cuba is also telling. In my view, there are three main reasons that Cuba was not addressed: 1) location: if this debate had been held in Florida, rather than Cleveland, the recent policy change towards Cuba’s tyrannical regime would not (could not) have been neglected; 2) economic relevance: given the small size of the Cuban economy, this recent policy change cannot compare to the tremendous impact of Immigration, ISIS, and Iran; 3) with the exception of Venezuela, Latin American countries with large economies might flirt with Cuba, but will not be overrun by it. Immigration was covered by all the candidates. Except for Trump, who repeated his conspiratorial theories that Mexico authorities plan to send the worst of the country’s inhabitants north, the candidates sounded very similar: legal Immigration yes, illegal no! Sen. Marco Rubio correctly pointed out that today, “the majority of people coming across the border are not from Mexico. They’re coming from Guatemala, El Salvador, [and] Honduras.” Yet the overwhelming majority of extra-legal immigrants today are from Mexico. Requiring them to leave, a take most candidates seem to support, only seems realistic if there is a fast way to invite those who can find a job to return legally—much like the Krieble Foundation’s Red Card proposal holds. This would require bringing the capabilities and strength of the private sector as a powerful collaborator in this essential but thorny issue. Gov. Scott Walker had a chance to speak about foreign policy, which was very important for a candidate from a state which is seldom mentioned in the international scene. He focused on the importance of having allies “not just in Israel, but throughout the Persian Gulf” mentioning Egypt, the Saudi leaders, and the United Arab Emirates. When he asked them, “What’s the greatest challenge in the world today? Set aside the Iran deal,” they answered “it’s the disengagement of America.” All of the candidates disparaged U.S. foreign policy and the Iran deal. Donald Trump did not hold back, declaring brashly, “what’s happening in Iran, is a disgrace, and it’s going to lead to destruction in large portions of the world.” Sen. Ted Cruz was not so different: “We have abandoned and alienated our friends and allies, and our enemies are stronger. Radical Islam is on the rise, Iran is on the verge of acquiring a nuclear weapon, China is waging cyber warfare against America.” Cruz stood by his criticism of General Dempsey, who argued that ISIS could be defeated by jobs and ideology alone. Jeb Bush piled in and criticized Barack Obama for abandoning Iraq: “He left, and when he left, Al Qaida was done for. ISIS was created because of the void that we left, and that void now exists as a caliphate the size of Indiana. To honor the people who died, we need to—we need to—stop the—Iran agreement, for sure, because the Iranian mullahs have their blood on their hands, and we need to take out ISIS with every tool at our disposal.” Dr. Carson shared similar concerns: “Our friend can’t trust us anymore. You know, Ukraine was a nuclear-armed state. They gave away their nuclear arms with the understanding that we would protect them. We won’t even give them offensive weapons.” Gov. Walker endorsed arming Ukraine and went one step further: “I would work with NATO to put forces on the eastern border of Poland and the Baltic nations, and I would reinstate, put in place back the missile defense system we had in Poland and the Czech Republic.” The feisty exchange between Gov. Christie and Sen. Paul on how to conduct proper surveillance of potential terrorists was one of the highlights of the debate—yet their focus is more on internal freedom and security than world affairs. In his closing statement, Donald Trump, leader in the polls, focused on other countries but spoke about the U.S. the way someone who is trying to become the coach of a team speaks about his team and its competitors, “Our country is in serious trouble. We don’t win anymore. We don’t beat China in trade. We don’t beat Japan, with their millions and millions of cars coming into this country, in trade. We can’t beat Mexico, at the border or in trade. We can’t do anything right. Our military has to be strengthened.” The first debate is over, voters will continue to watch—and so will the world.   Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.

Hong Kong And Beijing: The Future Of Economic Freedom:

Por Alejandro A. Chafuén. Publicado el 9/9/14 en:


Over the last few years I have seen student protests in the United States, Spain and Venezuela. I never expected, during my recent trip to Hong Kong, that I would witness a new “Occupy” movement. But, the leaders of “Occupy Central with Love and Peace” are not complaining about the lack of economic freedom. In fact, according to the Economic Freedom Index prepared by the Heritage Foundation, Hong Kong’s economic freedom score is 90.1, making it the top-rated economy for the 20th consecutive year. This includes the years that have elapsed since Hong Kong reverted to the mainland. In the Human Freedom index, produced by Cato, Fraser Institute and the Liberales Institut, which includes personal freedoms, Hong Kong still qualifies with an enviable third spot in the rankings.

The movement I saw in Hong Kong is prompted by the fear and frustration that the powers in Beijing will erode the strength of the institutions which led this tiny place on earth, to become a rock of liberty and prosperity. The central business district of Hong Kong, targeted by this “Occupy” movement, is seen as the headquarters of the business power elite. It is this elite which has played a relevant role in creating and preserving the strength and freedom of today’s economy.

Is the frustration based on overvaluing the voting aspects of democracy? That seems to be the belief of those who defend the decision of the National People Congress Standing Committee (NPCSC) who are restricting the number of candidates to the two or three approved by 1,200 electors who were selected by—and are loyal to—Beijing.

A relevant player, C.H Tung, resurfaced to defend the decision of the NPCSC. Tung was the first chief executive of Hong Kong, from the transfer of sovereignty in July 1997 until March 2005, when he stepped down before completing his term. Tung’s main message to those who want more democracy could be summed up by “be patient” or “count your blessings.” Although most freedom champions, especially those from abroad, concentrate on the limited choice allowed by the recently approved electoral law, Tung asks them to reflect that “in the short span of just 20 years—Hong Kong would have moved from having Britain parachute a governor into Hong Kong to having five million voters choosing their own leader.” Claudia Rosett however, of the Foundation for Defense of Democracies and a Forbes contributor who spent many years in Hong Kong, argues that comparing the nomination of Hong Kong governors by Great Britain, with its tradition of rule of law and democratic processes, with the nomination process by Beijing, with its authoritarian and dictatorial track record, is misleading.
Tung also praised the NPSCS decision as a “well-deserved fruit of our desire for democracy” and a “glittering achievement.” He revealed the political philosophy behind his position when he stated “Democracy doesn’t have a final destination. And to fight for democracy is far from being the whole story in improving people’s livelihoods which, after all, is the ultimate test of good governance.” As he is well versed on how the West understands freedom, Tung knows that he is being provocative. For more than a decade, Tung was a member of the Board of Overseers of the Hoover Institution at Stanford University. The statement by Larry Diamond, a senior fellow at Hoover, after the NPSCS announcement, that “it was a sad day for Hong Kong, and for democracy” must not have come as a surprise to Tung.

In the late 1980s, free-market champions based in Hong Kong founded the Hong Kong Centre for Economic Research (HKCER) and C.H. Tung was one of the first to send money for support. His willingness to defend Beijing’s decision was again reaffirmed when he made an all-out defended China’s reform efforts at the gathering of the Mont Pelerin Society (MPS). Tung defended China’s record and goals not only on the economic arena but on human rights, the environment, and even describing Beijing’s government as a major force in the search for peace. Many MPS members were not pleased with his remarks.

Y.C. Richard Wong, a Chicago Ph.D. who has been the director of HKCER since its founding, played an important role in trying to liberalize and democratize the electoral process. He was one of the most active members of a Group of 13 experts (G-13) who recommended opening the nominating committee for the chief executive election in 2017 to public participation and making it more democratic. They proposed doubling the size of the existing election committee from 1,200 to 2,400 members, with the expanded members being elected by registered voters in Hong Kong. When I asked him about the G-13 proposal his answer can be described as realistic fatalism. He said, “Our G-13 proposal now is in the wastepaper basket, we have a new law and we have to respect it.” It was clear that for Wong the decision was not ideal, but engaging in a major battle to oppose it might, in his mind, create more barriers to the move towards a more extended and transparent democracy.

What is next for the relationship between Hong Kong and the mainland? Businessmen and economists tend to focus on economic incentives. The more trade the less the chance for conflict. Speaking at a private function organized by the Reason Foundation, Louis-Vincent Gave, a Hong Kong based money manager and author of Too Different for Comfort highlighted that 15 percent of China’s trade takes place in renminbi, RMB, up from almost zero percent in 2009 and likely to increase. Hong Kong is the most important RMB center outside the mainland. During the last five years, RMB deposits in Hong Kong had surged tenfold to approximately RMB 900 billion. Gave believes that the increased RMB internalization will provide another boost to Hong Kong’s role as a leading financial center for China. Hong Kong is important to China for several other economic reasons. Despite that its economy represents only 3 percent of that of the mainland, Hong Kong is its second largest trading partner, representing over 9 percent of total trade. It is also the largest source of foreign investment and the largest recipient of Chinese external investment.
But not everything is economics, John Greenwood, a founder of HKCER and a member of the Hong Kong currency board, believes that the prime driver of these last and the coming decades is Chinese national pride. Regaining control of Macau and Hong Kong was essential, but only a first step to bring Taiwan to their fold. They will make major efforts to avoid messing up the integration of Hong Kong in a way which would endanger a peaceful reunification with Taiwan.

The relationship between China and Hong Kong is not simple, one freedom champion, such as Greenwood can testify that the government never pressured or criticized HKCER, even when the studies contradicted “party line.” Another, such as publisher Jimmy Lai, feels political pressure to tone down his support for political liberties. Andrew Shuen, of the Lion Rock Institute argues that “the goal is to maintain the balance that allows the continuity of economic flourishing and a gradual enhancement of political liberties, which will be best achieved by the people learning continuously from the consequences of choices made when exercising those very liberties.”

The road might be longer than some expected, but I sense that a majority will help them maintain the course.


Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.