Boardroom Tales

BOARDROOM TALES BY ANN CROTTY

C h i n a’s option falls flat

Global inequality prevails as communism taints Xi Jinping’s moves to hold the super rich to account

e -mail: c ro t t ya @ b d f m .co. z a

Democracy hasn’t made a difference to the millenniaold tendency for elites to capture the bulk of a co u n t r y ’s wealth

s you might imagine

Afrom its title, The “World Inequality Report 2022”is not what you would call an uplifting festive read. Unless you happen to be one of the 1% who, the report tells us, have captured 38% of all additional wealth accumulated since the mid-1990s. Th at ’s jaw-dropping stuff; it’s difficult to imagine something like that happening outside some dodgy autocratic r e g i me .

The danger with all this “1% owns almost the whole world”stuff is that it leads to indignation fatigue. Ten years ago the Occupy Wall Street movement stirred up the cynics and encouraged some hope that politicians across the globe would heed the concerns of their citizens.

For a year or so there was hope that political leaders would spurn the ties that had been cultivated with their powerful business peers over the decades, hope that the lobbying, the political donations and the well-oiled revolving door between politics and business would be s lo w e d .

Sadly, not much appears to have come from that headline-grabbing movement though, as any historian will tell you, revolutions are a long time in the making. And perhaps the rise of Bernie Sanders, Donald Trump, Jeremy Corbyn and Boris Johnson have their origin in that movement; certainly France’syellow vestsdo .

The depressing aspect of the report, which is co-authored by Thomas Piketty of Capital in the 21st Ce nt u r y fame, is the realisation that democracy hasn’t made one jot of difference to the millennia-old tendency for elites to capture the bulk of a co u nt r y ’s wealth. Today it seems as though powerful bankers such as JPMo r g a n ’s Jamie Dimonand their armies of lawyers hold more sway than political leaders and their ministers.

The inequality report describes how the top 1% held high shares of the wealth of the US and Europe at the end of the 19th century and into the early part of the 20th century. Much as you’d expect of the Dickensian predemocracy era.

Then came two world wars as well as political and economic upheaval, and in time the rolling out of universal franchise in the US and Europe. For 40 years after World War 2, democratically elected governments with relatively firm commitments to social welfare spending enabled the West to tout democratic capitalism as superior to anything the USSR and China could o f fe r .

By the late 1970s, wealth inequality had dropped significantly in the US and Western Europe. But then it all changed. By the early 1980s the pendulum began to swing back. It has not stopped swinging back.

“The economic policy mixes implemented in Europe and the US since the 1980s have favoured wealth concentration and were successful enough to invert the secular trend observed since the 1910s in rich count r ie s ,”w r it e Piketty et al.

It does seem that the fall of the Berlin Wall and the removal of the USSR as a competitive regime threat to the West encouraged even more aggressive deregulation, privatisation and tax-lite policies.

This is why it’s a shame China’s Xi Jinping seemed to go off the rails these past few years. For a while it did look as though “socialism with Chinese c h a r a c t e r i s t ic s ”could give the West’s aggressive “w i n ne r - t a ke s - a l l ”freemarket capitalism a run for its money in the court of public opinion. Xi’s “common prosperity”policy seemed targeted at the evident inequality of Western capitalism as much as at ho me grown Chinese billionaires.

His willingness to cause many of those billionaires to disappear suggests a Proudhon-type attitude to wealth as theft.

Western governments have a much more deferential attitude to their bill io n a i r e s . The deference might be down to obscene levels of lobbying, or the hope of a well-paid sinecure after retiring from public life.

And how delightfully whimsical was Xi’s decision to impose strict limits on the amount of time children could spend online.

For a while it looked as though Xi was going to prove to the world it is possible to curb the excesses of the free market, possible to hold the super wealthy to account. But then he fell back into a rabbit hole of Communist Party obsession with control, which makes the West’s hollowed-out crony democracy look a little less scary. x

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