A Chinese-American face-to-face worth encouraging, not feared
Ma and other Chinese high-tech boardroom superstars operate, just like their American counterparts, largely by their own rules. Their wealth has essentially isolated them from any existing regulations that they might find inconvenient. Last fall, before an august assembly of Chinese economic and political luminaries, an arrogant and condescending Ma openly lambasted government regulators for stifling innovation.
But this time, Chinese authorities fought back. They crushed a planned initial public offering from Ma’s financial arm that was to reap the biggest IPO bargain ever and announced new microcredit regulations that could drastically reduce Ma’s financial income.
American cheerleaders for a New Cold War dismissed the political importance of this setback against Ma. They either viewed the setback as a mere show of spite, or they described Ma as a staunch defender of China’s “innovative” pioneers of high technology. But these claims, other observers Remark, miss the real story. The ruling against Ma, they say, signals Beijing’s tougher stance on the entire Chinese high-tech billionaire class.
At the start of last month, for example, government regulators had China’s largely dominant version of Uber. deleted app stores. Food delivery services now have to pay a living wage. Tech companies with over one million users must “Take an exam before registering abroad” on foreign stock exchanges. These registrations abroad had been the quick ticket to corporate executive jackpots.
More dramatically, the Chinese authorities have totally revolutionized the fabulously profitable extracurricular tutoring industry. They ordered private tutoring companies to become nonprofits that cannot pursue rewarding IPOs for executives or attract foreign capital. The stock prices of the Chinese tutoring giants naturally fell almost immediately after the government’s decision. Chinese billionaire teaches titans subsequently all lost their billionaire status.
The bigger statistical picture: In the first six months of 2021, the richest ten in the world grew richer by $ 209 billion. richest in China lost $ 16 billion over the same period.
“The era of unlimited earnings for China’s ultra-rich” Bloombergby Blake Schmidt, Coco Liu and Venus Feng report, “Now seems to be coming to an abrupt end.”
What is happening here? Some analysts point to many of the same concerns that fuel public policy debates in the United States, among them “Anti-competitive behavior in the technology sector, risks to financial stability linked to poorly regulated lending platforms and the rapid proliferation of sensitive personal information in the hands of large companies”.
Chinese officials, add Hubert Horan, a seasoned business analyst, drew lessons from the American experience in high technology. They observed from afar that years of laissez-faire with the US tech giants have allowed a handful of companies to grow to “unprecedented” size and made it “virtually impossible” to manage the “externalities” created. by the tech giants. Any system that gives tycoons like Jeff Bezos and Mark Zuckerberg “unfettered freedom to post whatever rules they don’t like,” Chinese officials have found, “may not have produced results. effective for the rest of society ”.
Chinese authorities have also come to view public outrage at the injustice of their economy as a clear and present danger.
“The government is attacking the industries that create the most social discontent”, pose Liao Ming, founder of a Beijing-based financial firm, Prospect Avenue Capital.
China, in effect, is abandoning the “development phase” of its last three decades. In the new phase envisioned by China’s top political echelons, “common prosperity” will take priority over massive concentrations of private wealth, and keeping average Chinese families smiling will be far more important than keeping local billionaires beaming.
Bloomberg Chief Economist Tom Orlik and his colleague Tom Hancock are call the emerging new attitude of “progressive authoritarianism” of the Chinese administration. Regardless of the label, China’s new crackdown on the wealthy appears to be hugely popular in China. Similar crackdown on the super rich, polls indicate, would be equally popular in the United States.
Indeed, could we have finally found an arena of socially redemptive competition between the United States and China? Why, after all, waste billions in an arms race for a new cold war when we can compete for which nation, China or the United States, can do the most to reduce the corrosive gaps between the rich and the rest of us?
What a glorious competition this head-to-head for greater equality could be! The peoples of the “winner” and “loser” in this competition would find themselves living on a much more egalitarian globe, a world better able to fight the real terrors that confront it, starting with climate change.
Forget about the new cold war. We need a race to end the great private fortune.
Sam Pizzigati co-publishes Inequality.org. His latest books include The arguments in favor of a maximum salary and The rich don’t always win: the forgotten triumph over the plutocracy that created the American middle class, 1900-1970. Follow him on @Too_Much_Online.