Take a Lesson from a Little Dragon

4th February 1996

The 57m overseas Chinese ­ those living outside the country, hereafter called OCs ­ have become several times richer than us 58m Britons. Since so many of the oldest and richest started as coolies, often under British colonial rule, how did they? What changes do we need in British policy to emulate them?

The recommendations in this article are wholly mine, but I pinch most of the recorded facts from two books just published in America. They are written by two of my friends who have been very successful prophets. The books are Megatrends Asia, by John Naisbitt, and Asia Rising, by Jim Rohwer.

The OCs are spread through 60 countries, but Naisbitt calculates 53m now hover round China, ready to dynamise it. They mass in Taiwan, Hong Kong and Singapore. Only 3% of Thais, Indonesians and Filipinos are ethnic Chinese, but they own 70% of those countries' businesses. Perish the thought that the Chinese are genetically brighter than previously hovering British sahibs, and note that today's OCs have had some luck.

One big advantage is that they have no single country, and thus no ruling politicians. They operate from whichever low-tax area suits their talents best. The richest work mostly within the ASEAN Free Trade area, but it has no horror like a Euro commission. If an Asia commission told them to have a single currency, or compensate terrorists for shock while being arrested, or pay for Neil Kinnock's subsidies to a Spanish airline with Spanish trade-union practices, there would be no ASEAN. The OCs' biggest boon is that they do business in Asia's nascent dragon lair, which stretches from India to Japan, from just below the former Soviet Disunion to Indonesia.

That area has 3 billion of the world's nearly 6 billion folk, half aged under 25. They are growing richer faster than any large group in human history, the luckiest at the 7%-12% annual growth rate that doubles real GDP in 6-10 years. But why is the area thus soaring? What are the lessons for British policy? My main conclusion is that Asia teaches us how urgently we need to privatise our education, by vouchers or other means.

As 10-year-old Koreans or Taiwanese surpass British 13-year-olds at maths, the Paddy Ashdowns (who want to increase income tax to "invest in schools") should note that the Asian dragons spend less on state education than the 4%-plus of GDP spent by more socialist places like black Africa and Britain. The dynamic in Asia is parents paying private tuition fees from ordinary workers' incomes, to get their kids as high as they can into the 40-pupil classes of competing meritocrat schools and into whichever has the best record for leading to high-salary jobs. Out of those, the children obviate the need for welfare states by supporting mummy when she's granny.

Some 70% of Tokyo parents pay tutors to edge their children into the best nursery schools. Naisbitt cites a villager in China who has paid $21,350 up front to send her six-year-old son through a private school in Canton. Although $21K is 25 years of her average worker's wage, she drew on the "six-pocket syndrome". Thanks to birth control, a bright young Chinese can have six income-earning adults ­ two parents and two sets of grandparents ­ buying him every educational opportunity in the hope that he will solve all their futures by becoming one of China's 1m millionaires.

Since English is the language of the Internet, there is vast scope for telecomputed teaching of many subjects on it. It is tragic that Lady Thatcher faltered from her intention to finance our state education via vouchers. That would at last have brought consumer freedom to British education. Some voucher-financed schools would allow parents to choose against submitting their children to the habits of the National Union of Teachers. And bright new grammar schools could have big exports in telecomputing microbiology lessons to India.

India's state universities yearly produce more engineers than America's. Since some lack quality, the OCs think this a mistake. They prefer Japan's tiny state sector of free university education, with strict meritocratic entry that now embraces more of the poor than Oxbridge.

Taiwan and other OCs have sent an incredible 8m people since 1960 as graduate students to America and other countries, and gained in accelerated reverse flow because American taxpayers pay for some of this. "In Hong Kong and Singapore we have high-salary, low-tax economies," one returned OC told Naisbitt. "In America you have low salaries, high tax." That probably sums up their miracle.