Probe International

Before the welfare state existed, working-class Americans built their own safety nets, and those nets caught people. Fraternal mutual aid societies like the Odd Fellows, the Sons of Italy, and hundreds of smaller ethnic lodges ran insurance programs throughout the 19th and early 20th centuries. By 1920, roughly one in three adult American males belonged to one. Members paid modest dues, typically $1 to $2 monthly in 1900 dollars, and received sickness benefits, death payments, and access to lodge doctors who charged $1 to $2 per year per family. The Foresters of America covered 900,000 members by 1908. These institutions ran on mutual contracts between people who knew each other; it wasn't charity. Accountability created alignment of incentives. Lodge members had every incentive to verify that sick claims were genuine, because fraudulent payouts drained their own pool. Government bureaucrats face no such incentive. Someone else bears the cost of fraud in their system. The lodge doctor system collapsed because the American Medical Association lobbied state legislatures throughout the 1910s and 1920s to ban contract medicine. Doctors working for lodges earned less than AMA members preferred. The state obliged, eliminated the competition, and left citizens with the fee-for-service monopoly that still strips your paycheck today. Voluntary cooperation built welfare that worked. Politicians dismantled it.

John Cowperthwaite did more for human prosperity than any development economist drawing a government salary ever managed, and he did it by refusing to do almost anything at all. As Hong Kong's Financial Secretary from 1961 to 1971, Cowperthwaite ran one of the most radically free economies the modern world has ever seen. He kept taxes flat and low (the top income tax rate sat at 15%), ran consistent budget surpluses, abolished import tariffs, and blocked nearly every subsidy request that crossed his desk. When British civil servants demanded economic statistics to justify intervention, he refused to collect them. Not out of laziness. He genuinely believed that giving planners numbers gave them excuses. The results? In 1960, Hong Kong's per capita income stood at roughly 28% of Britain's. By 1997, Hong Kong had surpassed Britain. That trajectory happened without natural resources, without foreign aid, and without a single five-year plan drafted by well-intentioned economists from Oxford. Hong Kong had a harbor, people willing to work, and a bureaucrat with enough intellectual discipline to keep the state out of their way. Capital flows toward secure property rights and reliable rules, and flees the moment politicians start allocating it. Every industry Beijing picked as a "priority sector" during those same decades burned through subsidies and produced junk. Hong Kong's industries emerged organically, serving real demand, building real wealth. You benefit from this history whether you know it or not, because Hong Kong's success gave the world a controlled experiment that still embarrasses every advocate of managed development. The control group thrived. The planned economies didn't. Cowperthwaite retired to St Andrews, received a knighthood, and gave almost no interviews. That restraint was entirely in character.