Can we look some of the issues raised here? Is this the right thread to discuss?https://unherd.com/2021/08/what-the-wes ... rom-china/
The West can learn from China
There's a powerful moral force behind Beijing's recent crackdowns
The Chinese government has made an existential choice: rather than surviving by betting on the financial markets, it is going to produce stuff instead. It wants a nation full of engineers, not financial engineers; computer chips, rather than chocolate chips; innovation over financial experimentation. Beijing also wants an education system that actually educates, rather than creating a cottage industry of “progressive” credentialism that engenders a self-perpetuating upper class, rich both in terms of capital and diplomas but provides little in the way of genuine scholarship.
As economist David Goldman has noted, “in 2010, the five biggest tech companies accounted for just 11% of the market capitalisation of the S&P 500”. Today, however, “ten companies in the S&P 500 hold two-fifths of all the cash balances of index members, and all but one is a tech giant… The top three cash holders in the S&P — Microsoft, Apple, and Google — hold a fifth of all the cash held by index companies”.
“Apple is so cash-rich that it has bought back $327 billion of its stock since 2012. That explains why its stock price has risen by 82% in the past six years even though its operating income has barely changed
companies deploying cash flow toward stock buybacks, rather than investing in stateside facilities to enhance the nation’s productive investment and employment capabilities.
How did we get to point where our national economic conversation is dominated by chatter on the stock gyrations of GameStop, when this just an economic irrelevance for most of the 330 million people who live in America, and are struggling to sustain a modicum of economic security?
We ban the use of Chinese 5G equipment in US networks, but few ponder the question as to why there are no longer any American telecom equipment companies. After all, in the 1970s the two largest telecom equipment manufacturers were US companies: Western Electric and ITT.
Here in the United States, we lost our way decades ago, when we decided that the only social responsibility of a corporation was to increase its profits, community considerations and employees be damned. This laid the groundwork for economist Milton Friedman’s “stockholder theory”: the idea that shareholders, being the owners and the main risk-bearing participants, ought therefore to receive the biggest rewards.
Boeing and GE, to cite two prominent examples, were once poster boys for the success of American capitalism. Today they are but a shell of their former glory.
Both managements are now focused on financial engineering rather than manufacturing, much of which has been sold off, or outsourced to China. In doing so, they reflect an ethos that prioritises finance above all else in an economy increasingly characterised the layering of debt on top of debt
China’s State Administration for Market Regulation has been criticised for its fines on Alibaba Group, Tencent, and SF Holdings. But a closer look at the situations shows that these firms were singled out for what China’s chief regulator called “monopolistic corporate behaviour”, and the fines were levied “to protect consumer interests”. That sounds like the sort of thing that we are used to in the US, before our tech behemoths — Apple, Google, Facebook, Microsoft — gobbled up smaller competitors and began stifling competition and actively suppressing competitive innovation. These days, Beijing appears to believe in market competition more than we do.
It’s not as though Beijing’s authorities are saying mathematics is Western and needs to be replaced with Han math or Confucian physics — which would be the real equivalent of what we are currently doing in many of our universities, where the extremes of progressive ideology mean that medical school professors are forced apologise for referring to a patient’s biological sex on the grounds that “acknowledging biological sex can be considered transphobic”.
As Chinese fund manager Yuan Yuwei has argued, “housing, medical and education costs were the ‘three big mountains’ suffocating Chinese families and crowding out their consumption”. Yuan went on to describe these measures as “the most forceful reform I’ve seen over many years, and the most populist one. It benefits the masses at the cost of the richest and the elite groups.”
Unlike America’s Federal Reserve, whose increasing tolerance and support of financial bubbles continues to engender profound systemic fragility in the American economy, Beijing is prioritising social cohesion above the narrow interests of financial rentiers. If only American policymakers had demonstrated such foresight in decades past.