Mr. Yam discusses “Intervention true to guiding policy” Discussion by the Chief Executive of the Hong Kong Monetary Authority, Mr. Joseph Yam, published in South China Morning Post on 24/8/98. The current debate revolving around government intervention in the stock and futures markets to deter currency manipulation brought a feeling of nostalgia to me. It made me recall the many debates on government intervention there were within the administration when Sir Philip Haddon-Cave was financial secretary. I was then, in the late 1970s, a young economist in the Economic Services Branch of the Government Secretariat, with little responsibility and a lot to learn. Those debates were, somehow, rather more healthy and more intellectual. There was certainly less mud being thrown around. But the contrast is understandable. Today, this is a controversial issue. There are interested parties airing their grievances through punchy and articulate expressions of their views on this philosophical issue of interventionism. This is also an issue in which, in a more politicised environment and at a time when the community is enduring the pain of economic adjustment, the politically minded see great political mileage. A government with the whole of the legislature arguably in opposition makes a vulnerable target. It is so easy to wave the banner of free markets and condemn any government intervention, and be seen to be righteous and knowledgeable; notwithstanding that the government concerned has been so successfully running the freest economy in the world.
What we can see is that periods of relatively high global growth have coincided with accelerating international market integration, deregulation and a rapid spread of technology, which has enabled poorer countries to draw closer to richer countries. If we go back 150 years in time, we find ourselves in exactly this type of situation. At that time, obstacles to trade were being abolished and countries and regions were being united by railways and steamships. Postal systems were developed and the telegraph system made a breakthrough. Intercontinental cables were lowered into the seas to connect Europe to North and South America, Africa and Asia. The world experienced a revolution in transportation and information that has yet to be equalled. The Sweden of that time is a good example of how a country can make use of internationalisation to lift itself out of poverty. When the country entered the 19th century, it had extensive regulations in trade and industry. However, the process of deregulation of the economy began during the first half of the century, under pressure from the growing markets' need for greater flexibility. The cities' toll gates were abolished and people could move more freely around the country. At the same time, private ownership was strengthened. The foundations were laid for the rapid industrialisation that took place during the latter part of the 19th century, when Sweden joined the global economy in earnest.