The Canada and Hong Kong advantage: the rule of law

"Travel", said Francis Bacon, "is part of education for the young and a part of experience for those who are older." But there is an additional benefit from a journey outside of one's own borders: a reminder of why certain places function better than others.

In a recent trip to Hong Kong, I met with a plethora of civil servants, some politicians and a few business people, all with an obvious interest in the future of that territory. My purpose was simple: to get a sense of how that territory has held up in the face of massive change occurring in China proper.

Despite the fact Hong Kong has its own partly appointed/partly elected legislature and control of its borders, it faces the pressures of population, pollution, and corruption, given that it is right next door to China.

Some difficulties, such as pollution, are obviously cross-border; that one will only be solved as (mainland Chinese) governments and business hew more closely to the polluter-pay principle, and as technology and regulation advance. Others, such as corruption in China, can be guarded against internally in Hong Kong proper by keeping its own institutions strong.

In general, the Hong Kong mandarins and politicians I met were remarkably clear and unapologetic about two things: First, they want Hong Kong to stay capitalist. (Imagine a bureaucrat in Ottawa stating that as an end goal!) Second, they were determined to ensure the territory continues to be governed according to the rule of law.

The clarity in Hong Kong might well result from being next door to China. For example, the Chinese justice system, bureaucracy and indeed both government and the private sector are shot through with corruption and crony capitalism (as opposed to the useful, rules-based and merit-based type of capitalism).

The Chinese problems on such matters result in part because of inadequate attention to the rule of law and to property rights which are weakly enforced. As evidence, when its legal system and property rights were measured by my colleagues as part of the Fraser Institute's Economic Freedom of the World Index, China was in 77th place out of 153 jurisdictions. (That compares to Hong Kong, higher, at 24th spot, and Canada, at the 11th position.)

The numbers are backed up by anecdotes: One Hong Kong businessman told me the most important thing China could do in the near-term is to clean up its corrupt judiciary.

China aside for a moment, here is the other useful thing about travel: a reminder that one's own country should not be taken for granted.

While in Hong Kong, I kept up with latest news on the Senate scandal, including RCMP allegations that attempts were made to water down Senate reports on misbehaving senators. While pressuring senators to weaken reports does not rise to the level of a criminal offence, it does reveal a culture tempted to bend in-house rules to gain partisan advantage and/or to avoid further critical headlines.

Such revelations came out the very week I met with officials from Hong Kong's Independent Commission Against Corruption, an independent investigative body set up in the 1970s to combat corruption that was then perceived to be widespread in the police, government and in business.

The contrast is obvious: Here was Hong Kong, attempting to inoculate itself from lousy governance next door, and yet the temptation to bend the rules is a constant temptation regardless of where one lives.

If the importance of the rule of law seems blindingly obvious, it would be a mistake to think obvious and unlikely to happen are the same thing. (Think of all the graft uncovered in Quebec's construction and municipal governments in the past year.)

One critical difference between a well-functioning city-state on the periphery of East Asia, or a country like Canada and China, is the degree to which rules are predictable and enforced. Obvious or not, those tempted to bend or break the rules should recall such distinctions, as should the rest of us.