(lively electronic music) - Back in the old days, this part of the world used to be the economic superpower of the planet. There were dynasties that
discovered everything from the compass, to printing, to making paper, to gunpowder. They would lead huge
expeditions around the globe. This was China, the Middle Kingdom, and right next door, India. This was the center of the
global economic universe. But around the 1800s,
that started changing. (photos click) Over here, in Europe
and the United States, there was a major revolution
that started taking place. Science, then machines, then weapons, trains, cars, flight, bombs, factories, cities, and
with their new power, these countries started to expand to take over large swathes of the map. China remained a great civilization, but as the west started showing up, knocking on China's door
with their big guns, China couldn't really
match their firepower, and they had to concede land to Britain, which is how we got Hong Kong. The industrial revolution
didn't really happen in China the same way it did in the west, and by the middle of the 1800s, China began a massive decline in its economic standing in the world. A century later, that
situation got way worse as China was invaded
by its neighbor, Japan. China's economy was no longer
the prosperous Middle Kingdom, but rather a shadow of itself, a poor country that was
being occupied by outsiders. Once World War II was over, the west devised a new global
economic and financial system. It was modeled after the economic system that was working so well in the west, capitalism, free enterprise, still with some government oversight and high taxes for the
rich and corporations, but it was still capitalism, and after the war, this
capitalism would go on to become a miracle for many countries, rebuilding Germany, France, Japan. For many in the west, post-World War II capitalism
was like a magic elixir that was fixing everything. It was working so well that more and more
people started to believe that we needed to get
government out of capitalism, and let the market just do its thing. One of the major advocates for this idea of unfettered capitalism was this guy. - There has never in history
been a more effective machine for eliminating poverty than the free enterprise
system and the free market. - A Chicago-based economist
named Milton Friedman. - If they fail, they bear the cost. If they succeed, they get the benefit. - The idea at the core of this financial and economic system was that
companies would get investment from people who owned
shares in that company, we call this a corporation, and that the sole purpose
of this corporation was to make money for these
owners, or these shareholders. In Milton Friedman's own words, quote, "The social responsibility "of a business is to increase profits." That is the rule of a business. Increasing short term
gains for shareholders would benefit all of society, according to this model. And if you look at the data, in the United States and the west, Milton Friedman sort of had a point. (horn honks) And it led to huge prosperity in the west, as the U.S. economy exploded. Wait a minute, but what about China? Aren't we talking about
China and its economy? You know, the Middle Kingdom, China. So, while the U.S. and
western economies are thriving because of this corporate
free market capitalism that was taking over the world, China was descending further
and further into decline. Instead of joining the capitalism party that the west was spreading throughout the world, China resisted, turning to a one-party-rule
communist system, headed by this guy, Mao Zedong, who destroyed any chance of China's economy ever
joining the prosperity happening around the world. By the 1970s, China was a
place of widespread poverty. The once prosperous kingdom
had reached rock bottom, but that was all about to change. (film projector clicks) So it's the 1970s, and this is China's new
leader, Deng Xiaoping. He came into power hoping to turn around this 150 years of humiliation in China, the decline of China as a superpower. Elsewhere in the region, China's neighbors had economies that joined the global economic party that was happening in capitalism, and they were thriving. They saw immense economic miracles, and pulled millions out of poverty. Deng specifically went
on a visit to Singapore early on in his term where ethnic Chinese had
adopted the free market, and they were thriving. He felt inspired. The Maoist economic doctrine that had failed was over, and it was time to see if China
could rebuild its economy, experimenting with some
version of capitalism. But he had to do this carefully so as not to disrupt the one-party rule that China had created, so he decided to just focus on one little village, a sleepy village in southern China of just around 30,000 people,
right across the border from the British-controlled Hong Kong, which, at the time, was thriving because of its hardcore
capitalistic economy. Deng Xiaoping designated this little town as, quote, a special economic zone where foreign companies could set up and invest in a very
capitalistic free market. Hong Kong would sort of act as a bridge between western businesses
and this little gateway into communist China. It was still socialism, but with some Chinese
capitalistic characteristics. What happens next is arguably the most mind-blowing economic miracle ever to have taken place on planet Earth. (lively electronic music) This little, sleepy village that was a special economic
zone in China exploded from a little fishing village with little more than
a few thousand people and some rice paddies to a massive city of over 10 million people. The average income went from $1 a day to over $30,000 a year. This starts happening all over China, and meanwhile, Milton Friedman's back in the U.S., being like, (lively orchestral music) yep, told ya. Soon, there were a bunch of
cities designated in China for special economic activity, or, basically, capitalism
in a socialist country, and more and more foreign
companies flocked to China for its cheap labor. It became the world's factory. China joined this trend
of other Asian economies, and eventually passed them up to become the second
largest economy on earth. You can see this in a graph. This year, Asia will actually
pass the rest of the world in accounting for more
than 50% of global GDP. It is a massive economic transformation, and it explains why China
has become so powerful. Okay, but wait, this is a very wonderful
story about capitalism and its ability to lift millions
of people out of poverty, and to industrialize a
country seemingly overnight, but there's another side to this coin that we need to talk about. (paper rustles) I have two graphs I wanna show you. (paper rustles) They look like this. Okay, let's look at this one first. It's called the Elephant Graph. Do you sorta see why? (elephant trumpets) Let's deconstruct this graph, and try to understand what this says about the past 30 years
of the rise of China. On this axis is everyone on
earth ranked by their income, grouped into percentiles,
so these people down here make an income that is
the 10th percentile, the lowest 10% in the world, and then the 20th percentile,
and so on, and so on, up to these people up here who
are the richest in the world. They have an income that puts
them in the 90th percentile. This axis here shows how much growth and income these people have had over the past 35 years, basically during the heyday
of shareholder capitalism and the rise of China. So, you'll see how this
plays out in just a second. Let's start plotting
how much income growth each of these groups saw
over the past 35 years. The bottom 10% saw their incomes grow by around 75%, not bad. These are people who live
in the poorest countries, who make the lowest income in the world. The 20-30% saw huge
growth in their income, 125% and more over the past 35 years. This is like the new middle class in China and other Asian countries who saw huge income growth
due to globalization. They did really well under this system. But then, you start to get to the people in the 50th, and 60th, and 70th, and 80th percentile. This is basically people who live in the middle class in the west. Their incomes have grown much slower, sometimes under 50% over
the course of 35 years, which is little over 1% a year, not very much income growth, and some of these people in the west have seen their incomes shrink, like the blue collar workers in Detroit and the Rust Belt whose
jobs disappeared to China. So, so far, you can sort of
see why this makes sense. The people in China who benefited from this mass industrialization
saw huge benefits, and the people here in the United States and in the west who saw
jobs go overseas to China saw a way slower growth in their income. But watch what happens next, when we get to the groups of people who are at the 99 percentile, basically the richest 1% in the world, and for this, I actually
have to stretch out the graph to get us a little bit more granular. These are the people who have the highest incomes in the world. Let's see how their income has grown over the past 35 years. You can see that their income has exploded under this system. They're seeing tripling of their income in the past 35 years. Now, a reminder that
this is 35 years of data from every economy on earth. This shows everyone on the planet. So this gives us a view
of who are the winners and the losers of this
shareholder capitalism that has globalized to
Asia and around the world. The top 1% of income earners saw the biggest benefits from this system. They are the ones who
disproportionately benefit from shareholder capitalism and the growth of globalization. (soft electric piano music) Okay, so that's my first graph. It's the Elephant Graph. It is a very useful way
to see one of the results of this version of capitalism
and the growth of China. The second graph looks like this. This shows the amount of
CO2 emissions by country. You've got Europe and the United States, and then, up here, you've got China, the world's largest emitter of CO2. Like the Elephant Graph, this graph combines loads of data to show us that shareholder
capitalism focuses so much on short term profits for shareholders that it leaves out any consideration for how this economic activity
affects the planet we live on and our ability to live on it. I know you've heard this message a bunch, and if you're like me, it is hard to not become sort of numb to this impending crisis that, we don't really
know what it looks like, and it feels like there's
nothing we can do, but we have to do
everything really quickly. But let me just reiterate in my own words that it is now a certain fact that our global climate is changing in such a way that it
will very likely lead to immense shifts on our earth, and our ability to live on our earth. It's already happening, it
will continue to happen, and all we can do now is maybe put on the brakes a little bit. Okay, let me just wrap this up, and give you my final thought on what this all means. I'm not showing you all these graphs because I'm just, like, a data nerd who loves to look at graphs, although I kind of am. Sorry. I'm showing you these graphs because the story of the rise of China is often a story of how
capitalism has pulled tens and hundreds of millions out of poverty, and it has, and that's amazing, but these graphs give us a view of what it has also
done, what this version of capitalism also
incentivizes and results in. If we're going to consider the effects of this version of capitalism, we have to look at all of its effects, not just some of them. So, what's the solution? Is it socialism? No, it's not. It is simply a new version of capitalism, a reframing of how we think about business and globalization, one that old Milton
Friedman would despise, and one that more and more businesses are actually realizing we must adopt. The solution isn't to scrap
capitalism altogether, but instead to expand it, to not just focus on shareholders and delivering them short term profits as quickly and as efficiently as possible, but to also focus on other people who are affected by the business. You can call these stakeholders. This is like the customers,
and the suppliers, and the employees, and the government, and the overall economy, and the planet, and, of course, shareholders. This is called stakeholder capitalism, and it's basically just an acknowledgment that businesses that focus only on profits for shareholders don't end
up benefiting everyone. There are winners and losers. It's not good for a huge
swathe of the population, nor for the changing climate. Oh, and by the way, this isn't
some fringe liberal idea. Some of the biggest companies
here in the United States like Walmart, Apple, JPMorgan, have signed onto adopting
a new model of capitalism. This is changing, and in
the next five to 10 years, I believe we will see a new version of how businesses interact in the economy. So you're probably wondering, listen, I clicked on a video
about the rise of China, and we're ending here with
stakeholder capitalism. The rise of China is
a story of capitalism, a certain version of capitalism. It's a story about how
capitalism can morph and change depending on what
effects we want businesses to play in our society. If we want to produce
the most amount of wealth in the most efficient way, then the old shareholder model actually really works well for that, but if you want businesses
to benefit everyone, including our children,
and our grandchildren, and their ability to live on this planet, then our capitalism needs
to pull in more priorities than just prophets for shareholders. - [Milton] What may be right for one stage in the development of an economy may not be right for another stage. - [Reporter] The so-called
greenhouse effect is created by carbon dioxide, a colorless, odorless gas. - So, I got to dig through a
lot of data for this video, and I was able to partner
with the World Economic Forum, which is a think tank that I respect. They actually pioneered this idea of stakeholder capitalism decades ago, well before Apple and Walmart realized that it was a good idea. The head of the World Economic Forum just launched a book called literally "Stakeholder Capitalism." It's an in-depth look at not only the rise of Asia and China, but also other major trends that help us understand the need to upgrade our capitalism. The book is really good. It's packed with useful
information and graphics. It's easy to read and to comprehend. I'm gonna put a link in the description where you can learn more. It is available for you to purchase now if you want to get a deeper look into the future of our economy. Thank you, World Economic Forum, for partnering with me on this video. The Davos Summit happened this week, and I'm really glad that I was able to be a part of it. So, hope you're all doing well, having a good year so far, 2021. There's a new president down the road, and it's kind of exciting. And I'll see you in the next one.
Other than the aesthetics, I don't think that it's a good video.
He didn't explain where China is coming from after being colonised by imperialist countries like GB and Japan and what China had to overcome. He didn't explain what it means to be colonised by such forces.
For him, European countries (western European countries to be fair) just expanded because they were more technologically advanced compared to other countries. No, European countries like France or GB committed crimes against humanity while colonising and exploiting other countries' resources. Note that the form of most countries we know today, which are nation states, do come from European countries which defined themselves based on ethnicity. Those same colonial countries had in mind to exploit resources only to benefit themselves. By that, I mean expanding very few people's wealth, the so called Bourgeoisie. Let's not forget the situation of European workers up until after WW2 where capitalism did it's "wonders". Engels didn't invent the poverty of the English working class.
Being colonised by imperialist countries leaves scars. We can see that in literally all countries of Maghreb like Algeria, Tunisia, Morocco etc.. Now, we know that China had to overcome European countries' colonisation and also Japan's. Japan occupied a big chunk of China's territory and were ready to do what ever it took (for example the Nanjing massacre) to colonise more. Well, turns out the People's Liberation Army freed China from colonisers. The Chinese people had to overcome several decades of political instability on a surface area almost as big as the European continent itself.
Johnny then only presented capitalism as a system that made Western countries prosperous and rich. He didn't present all the horrors capitalism did in Western countries and the countries they exploited in order for capitalism to keep running. He also presented free market capitalism as being what made the special economic zones in China as successful as they are today. This only shows how little in depth he presents China's economic system. Their system is not just based on one guys opinion of how the world would work so great under capitalism. It is way more complex that that.
He also pointed China out as the biggest CO2 emitter of the planet. Yes but he didn't go in depth as why it is so and what China is doing compared to other countries in terms of environmental actions.
What he then proposes is stakeholder capitalism as an alternative to our current capitalism. Now, I'm not very familiar with this kind of capitalism but I'll try to analyse what he presents. He really doesn't go in depth so I had to read a bit more on the topic. It looks like, it is not a very developed theory yet but here is a definition from the website Investopedia.
The big problem that jumps into my eyes is the conflict of interests that exist in this system. The companies purpose is not to maximize profits but you have to take the shareholder into account ? The problem with this is that no sound capitalist investor would agree to that. What is the point of owning shares of a company if you can't make the most money out of it. Oh but you are being kind and thoughtful of other stakeholders ? I also question how a transition from our actual system to stakeholder capitalism would be possible. The ones with the most power in capitalist countries are the richest. Most of the time, they are shareholders. So how is it going to be possible to take away the power from these people ? Is it by having big companies like Walmart, Apple and JPMorganChase be more thoughtful of other stakeholders just like that, out of the blue ? Who is going to lead this transition ? Do we just have to wait patiently until the executives of big companies have this brilliant idea ? I don't think so.
This sounds to me like a SJW's wet dream : to make slow and steady reforms because "that's the way the world works". For me, it has no theoretical and scientific explanations to back it up. What Johnny presents does not recognize the class struggles and the exploitation of entire populations by countries running a capitalist system. He only categorized the world's population briefly, only based on the rise of income in a 31 year period of time. It is a way too simplistic way to present our world.
In my opinion, such progressive ideas aren't that much better than neo-liberal ones. They just turn the other cheek to capitalism and imperialism, as if it were possible for these systems to better themselves because we're better now and we're more aware that our plant is literally suffering and our species dying if we don't act now.
Thank you for reading if you have made it this far. Don't hesitate to be critical about what I wrote.
Cheers !
Which part? The China adopting free market economics part? Or the “the solution to global problems is more capitalism” part?
Having watched his other videos, Johnny Harris doesn't seem like a person with ill intent to twist the truth. The problem with this video is that his information and perspective are from Western sources.
Right from the first two minutes. His narrative is that China was economically the highest in the world until around 1800s when the Industrial Revolution was taking shape in the West. From industrial machines and capitalism, Western powers expanded around the globe and started knocking on China's door. The famous of which Opium Wars, Hong Kong, and all that. And it gets worst for China as Japan invaded.
This is grossly inaccurate. Western powers expanded centuries before. Every American children know the song, in 1492 Columbus sailed the ocean. Columbus was searching for a westward route to China. That's how indigenous people of the Americas incorrectly called Indians, because the settlers thought they landed somewhere in India. In his exploration, Columbus had with him a [fiction] book, Travels of Marco Polo. Marco Polo's book embellish the vast wealth of China. With the invention of Guttenberg printing press, books like Marco Polo became widely accessible. This started the race to reach China and her riches.
Ming China leased Macau to the Portuguese in 1557. After the fall of the Ming dynasty, a Ming general defeated the Dutch to retake Taiwan in 1661. All this before the first Opium war in 1839. The Opium Wars are often talked about, but China was forced to sign over a thousand unequal treaties - gunboat diplomacy. The Boxer Rebellion alone forced Qing China to pay in reparation in equivalent of 12 years of government revenues.
Johnny Harris talks in rose colored glass of capitalism and industrial might, but sweep the exploitation and riches stolen under the carpets. What made possible to fuel industrial revolution? What enabled all that wealth? It was not by coincident British stole vast wealth from China, India, and her colonies than any European powers that the Industrial Revolution started in Britain.
Without exploitation in the equation, see how well Capitalism functions.
To think of what?
In general, its somewhat correct, details can be twisted here and there.
Messed up with the elephant graph. 3 sections. Lowest 30%-40ish%, middle 50-90%, highest 90-100%.
In actuality, the lowest 30-40% are all non white, non industrialized countries. The highest 90%...are the super rich. There were hardly any super rich in China 50% years ago!!
The middle 50 to the highest 100% are all industrialized countries, 90% white, minus some rich asians in asian tiger countries.
The graph mixed them all together and pretended that the low collar worker in the west losing their jobs is becoz the rising poor first 40% of Chinese and other Asians.
Which is the narrative of the far right and the conservatives for years. Its been wrong 40 years ago, its still wrong today, not to mention highly racist.
Its true that low collar workers gained relatively speaking, keyword here: RELATIVELY speaking, not as much as poorest.
But first, this is a result of the policies of different countries. So if poor whites want to complain, they need to complain about that massive military budget for war that 1 country has, and no other country has. Its no shocker that different policies from different countries lead to different outcomes...
Second, its all relatively speaking. They were earning 3000-5000 bucks for doing notting while asian farmer was earning 300 bucks a year! And theres talk about "unequal" growth? Are you shizzling me? The only thing unequal is how non white countries had so much poverty to begin with!!!
A 50% increase in wealth when you made 100k a year is still 150k. And a 200% increase when you make 300 bucks a year, is still just 1000 bucks a year. The low collar worker in the west arent in any position to complain.