OK, Politico did not use the exact term, but Charles Davidson and Jeffrey Gedmin make a pretty bold statement in today’s edition. China is a kleptocracy and this encourages instability in the country and in the global economy.
We have argued this pretty much since the founding of this website. A broad system of crony capitalism like the one in China creates distortions in the economy, prices are obfuscated, the connected become wealthy, dishonesty is compounded, until the facade eventually crumbles when the lies become apparent. To some degree that is what we are seeing now with the Chinese downturn.
Such a system is destabilizing politically as well. As corruption is rewarded and cronies amass power and wealth, resentment increases among everyday people. Anger bubbles as the cancer spreads throughout the land.
Davidson and Gedmin are right to highlight the system of kleptocracy in China as President Xi is visiting the United States. But they argue that we should be actively undermining the regime on moral grounds, and from a position of ethical superiority.
But we have serious (and similar) problems in this country. Perhaps we should first extract the log from our own eye.
Should Chinese crony capitalism be fought? Of course. But all crony capitalism should be fought including and particularly in the USA. Because we have allowed the crony capitalist system to expand in recent years our authority is undermined in the eyes of the world. It’s very hard to be a shining light on the hill when the political class in America would just as soon keep the lights off.
Still some of the policies suggested in the piece are good ones.
China is ruled by thieves. Its cancerous system of kleptocracy must be confronted when Xi Jinping makes his first state visit to the United States this week. Kleptocracies — authoritarian systems designed to defend and extend the wealth and power of a ruling class — now plague the planet. America needs to recognize the threat to global world order and get serious about a response.
According to Freedom House, after a three-decade increase in the number of “free” countries, over the past 15 years authoritarians have mounted a comeback. Most of these new regimes are kleptocracies. They’re oil-rich states like Azerbaijan and Kazakhstan. They’re adversarial regimes like today’s Russia and Iran. They’re partially free countries like Ukraine and Georgia. Because of China’s size and ability to project power, however, it stands out as a particularly alarming case.