Chinese leaders will not agree to changes in China's economic system. Why should he change? Wen | former US labor secretary Robert Reich, UC Berkeley professor of public policy
Key US economic system is to maximize shareholder returns. It is also to achieve this goal: Friday, Standard & Poor's 500 index hit a record high.
But after removing inflation, four decades, the income of ordinary Americans did not grow significantly.
In contrast, China's economy is focused on maximizing national interests. It is also to achieve this goal: Forty years ago, China was a backward agricultural country. Today, it is the world's second largest economy, the world's largest automotive industry and several of the world's most influential technology companies. Over the past four decades, hundreds of millions of Chinese people out of poverty.
These two systems are essentially different.
The core of the American economic system is 500 big companies, which is headquartered in the United States, but manufacturing, purchasing and sales locations around the world. Their employees have more than half of the people are not American, nor work in the United States. One-third of Americans are not shareholders.
These large companies to the US and there is no particular loyalty. They are only responsible to shareholders and loyalty.
They will take all necessary measures to improve their stock prices - including lower wages, against the union, the full-time employees into contract workers not prepared, will be outsourced parts to the most expensive parts of the world where the transfer of profits to the lowest tax around the world place and give out their top CEO ridiculous salary.
In contrast, the core of China's economy is state-owned enterprises. They can borrow from state banks to artificially low interest rates. These state-owned enterprises balance the ups and downs of China's economy, while the private sector reluctant to do so, they pay more money to achieve this goal.
They are also the engine of economic growth, prosperity needed to create China's capital-intensive investment, including investment in cutting-edge technology.
China's top planners and state-owned enterprises may take all necessary measures to improve the welfare of the people, and let China become the world's largest and most influential economy.
Since 1978, China's economy (GDP) growth of 9% per year on average, in recent years, the growth rate slowed down. US tariffs against possible allowed growth to 6% or 7%, but this rate is still faster than almost any other economy in the world, including the United States.
American economic system with taxes, subsidies and regulations to guide the company to act in the public interest. But with respect to the interests of shareholders to maximize the primary objective of the enterprise, these methods proved to be of little effect.
For instance, the nation's largest employer Wal-Mart last week announced the layoff of 570 people. Although it benefited Trump and Republican corporate tax cuts, to more than $ 2 billion in the bag. Last year the company closed dozens of Sam's Club stores, resulting in thousands of Americans unemployed.
At the same time, Wal-Mart invested more than $ 20 billion to buy back its own shares, which increases the pay of Wal-Mart executives, and let wealthy investors benefit more, but there is no benefit to the US economy. It is worth noting that Wal-Mart is a multinational company, it does not exclude the bribery of foreign officials with the means to achieve their goals. On Thursday, it agreed to pay $ 282 million to resolve allegations of corruption in the federal government for its overseas, including a problem called "witch" middleman provided more than $ 500,000, so she "get" a building permit to Brazil.
In the entire US economy, Trump's tax cuts have little effect on increasing employment and improve the wages, but the company's executives and big investors, it has a lot of advantages. According to the IMF report said the company will not reduce the money to reinvest in their business, but to buy back shares.
However, and so on. America is not a democratic country?
Yes, but the impact on public policy most Americans do not even little. This is Trump's tax cuts for any reason they have little benefit.
This is Princeton University Martin Jilun Si (Martin Gilens) and Benjamin Page of Northwestern University (Benjamin Page) conclusions. They analyzed the 1799 Parliament discussed policy issues affecting the United States found that the average person's preference for American public policy seems negligible, almost zero, there is no statistical significance. In contrast, US lawmakers are responding wealthy individuals (usually large corporate executives and Wall Street giants) and large corporations demand. These large companies have the strongest lobbying power and financial strength, to provide funds for the campaign.
Do not blame American companies, their business is to maximize profit and let the stock price rather than service to America.
However, due to their dominance in American politics and they are responsible for the welfare of shares rather than the Americans, would like to expect them to create good American jobs or improve the competitiveness of the United States, it would be too naive.
I'm not saying we should emulate China's economic system, I am suggesting that we should not be complacent on the US economy.
We should reduce the large US companies dominate American politics, rather than trying to get China to change.
China is not the cause of over half of Americans do not pay rise for four decades, the simple fact is that Americans are not in a major growing system of large US companies operate in a robust, these large companies aimed at increasing their share prices not for the benefit of Americans.