Happy Bastille Day!

| July 14, 2023

Bastille Day is a good time to reflect on the importance of free speech to a prosperous and dynamic society. Almost a fifth of the infamous Bastille prison’s occupants, including free-speech advocate Voltaire, found themselves condemned for “literary” crimes. The printing of Diderot’s Encyclopédie, an attempt to assemble all the world’s knowledge in one place, needed to take place in secret and outside of France. From there it could be smuggled back into the country. Editors were jailed.

I see an investment lesson here. In his book Free Speech: A History from Socrates to Social Media, Jacob Mchangama, the Danish lawyer and human-rights advocate, writes that “a century after the first publication, the French cities with more subscribers to the Encyclopédie were also the most innovative and prosperous.” I believe that it is not an accident that Silicon Valley inventiveness sprang from the same place as the hungry i nightclub, where Tom Lehrer recorded the satirical songs for the album That Was The Year That Was in 1964 through 1965. Lehrer blended scientific genius with musical genius to lampoon the topics of the day. In my view, he embodied the dynamism that makes free nations thrive.1

Sadly, we have too many Bastilles around the world and not enough satirists free to skewer those in power. A good example is China, where explanations abound for why the long-anticipated Chinese recovery has not materialized. There is a lot of math in many of these theories. I do not believe that it is a finance question at all. My assertion is that nations where free speech and open inquiry thrive are great places to invest in. Conversely, nations in which fundamental rights are abused are terrible places to invest. The Chinese Communist Party (CCP) used pandemic restrictions to eradicate the spark of liberty in Hong Kong and everywhere in China. The CCP is now convicting youths for singing songs.2 They are about to vote on banning songs and are pressuring American companies to suppress search results.3 A Chinese Tom Lehrer would be jailed in Hong Kong. In fact, journalists are in prison now in Hong Kong, Russia, Turkey, and too many places to mention. All these nations are now terrible places to invest in and to live in.

More ominously for China bulls, the CCP is requiring businesses to rewrite their charters to include a role for the party. This can have no other outcome than to stifle innovation, creativity, and risk-taking. I believe that it already has. Suppressing Chinese innovation is about as smart as forbidding the collection of knowledge in the Encyclopédie. The results are there to see. The fact that Cuba was an investing black hole under both Batista and Castro shows how universal the basic premise is. Authoritarianism equals investment failure and the death of prosperity. Venezuelan oil anyone?

Mchangama notes that “draconian censorship had become a competitive disadvantage in Enlightenment Europe.” He writes that France’s Director of the Library thought that “a man who reads only books that originally appeared with the explicit sanction of the government… would be behind his contemporaries by nearly a century.”4 That never stops tyrants from suppressing the prospects for their own people, as the decline of France demonstrated.

Happy Bastille Day and “Vive la Liberté!”

1.&4) Mchangama, J. (n.d.). Free Speech. In Free speech: A history from socrates to social media (p. 73, 128). essay, Basic Books.

2.&3) "Why Hong Kong is criminalising a song." The Economist, online, The Economist Explains. July 5th, 2023. https://www.economist.com/the-economist-explains/2023/07/05/why-hong-kong-is-criminalising-a-song. Accessed on 07.14.2023.