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Look East for Your Economic Stimulus

9:59 AM, Jan 17, 2008 • By JAMES JAY CARAFANO
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Hong Kong
I'm not the only Heritage Foundation guy in Hong Kong this week. Heritage President Ed Feulner was in town to release the 2008 "Index of Economic Freedom." A joint project of the Heritage Foundation and the Wall Street Journal, the index grades every country on the openness of their economy and the potential for economic opportunity. This year's winner is Hong Kong. That was no big surprise. Hong Kong has been ranked No. 1 in economic freedom every year, starting with the first "Index," published 14 years ago.

One striking thing about this year's report, though, is how many Pacific nations rank among world leaders in economic freedom. Indeed, six of the eight top-ranked countries border the Pacific. Four of those six are Asian: Hong Kong (1), Singapore (2), Australia (4), and New Zealand (6). The U.S. ranks fifth--an indication that America might well spend more time looking East.

Americans are getting exercised by warnings of a possible recession and talk about an economic "stimulus" package from Washington. But the early word about the stimulants under discussion suggests that--as is often the case -- the promised help from Washington is calculated more to win votes than generate jobs. Odds are that, whatever "stimulus" Washington applies will have only a minor effect on America's $14 trillion economy. But the best stimulus package is to unleash the economy and let free economies do what they do best--grow. That's what Hong Kong, Singapore, Australia, and New Zealand have done. And that's why Asia offers tremendous opportunities for growth.

From a security standpoint, turning East makes sense, too. Asia has been awash with "happy talk." South Korea is talking to North Korea; Taiwan is talking to China, and China is talking to India. Asia's hottest hot spots all look to be a little cooler as a result.

American leadership in Asia could help keep things moving in the right direction. Only continued U.S. pressure will ensure that North Korea follows through on backing away from its "nuclear bully" stance. Missile defense in Asia won't happen without U.S. leadership. The Taiwan Straits will always be potentially troubled waters without a vigilant U.S. presence. And U.S.-India relations have come a long way--but have a long way to go.

And, of course, there is Pakistan. My guess is al Qaeda has overplayed its hand in Pakistan much as it did in Iraq--and there will be serious "blowback" against the extremists (regardless of who is Pakistan's president). A year from now Osama bin Laden and his cohorts may find themselves pressed between a Pakistan which no longer wants them and an Afghanistan with a NATO presence (bucked-up by the United States) this is not about to take them back. This happy scenario, however, won't happen without leadership from the White House. To regain momentum here, the U.S. needs to remain actively engaged with both countries.

American leadership can make a real difference in Asia this year. And there is a real payoff for the effort: an opportunity to engage with some of the most dynamic economies in the world. And that's a great way to help ward off a recession.