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‘I would rather cry in a BMW than laugh on the back of a bicycle’

Wednesday, January 20, 2016

Global stock-markets are in a crashing frenzy over the economic ‘slow down’ in China. Yet China optimists would say that there’s an overreaction and that China is reshaping to a consumer society.

Perhaps the ‘new’ China of rampant consumerism was on raw display in the wildly popular Chinese TV dating show If you are the one. With 36 million regular viewers, one young female contestant disclosed her ‘love’ match criteria with the words ‘I would rather cry in a BMW than laugh on the back of a bicycle.’  Her comment made her an overnight celebrity.

But what’s also clear with China is its chronic lack of basic institutions. As ICA Executive Director Ken Phillips remarks: ‘In 2013, I attended a small business conference in Macao. I was struck by the presentation of a senior Communist Party official who said that China lacked independent third-party credit-rating agencies. He predicted economic volatility because of the lack of such institutions.’ This is explained in the online analyst capx.

Certainly China will, it appears, not do what Venezuela is doing as it self-destructs in its rush to a communist economy.

And it might be argued that one sign of an advancing developed economy is a rise in self-employment. Self-employment could be described as ‘capitalism of the individual’ and can be compared with traditional ‘capitalism of concentrated wealth’. So it is with China. The Global Times reports that this Chinese self-employed ‘capitalism of the individual’ produces the happiest workers. At ICA, we’ve known this for a long time. It’s consistent with research dating back to 2004 which strongly suggests that self-employed people are happier than employees.

And it’s not simply China. Just last year, self-employed numbers in Canada rose 91,000, making up half of all new jobs. Yet, like some in the UK, this is seen as weakness. See here and here.

For all that, UK self-employment continues to surge. The UK Telegraph explains that self-employed numbers are fast catching up with public-sector workers. Self-employment is up 71,000 in the last quarter, with public-sector workers down 59,000 in the last year. The Telegraph says that the sharing economy will continue to drive this change—with big implications for economics and politics.

However, beware of powerful institutional push-back. We’ll give some Australian examples soon.


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