Peter Mandelson famously said that he was ‘intensely relaxed about people getting filthy rich’. As was the case with many aspects of New Labour, he was working firmly in the Leninist intellectual tradition. Some 20 years earlier, the then leader of the Chinese Communist Party, Deng Xiaoping, stated that ‘to get rich is glorious’.
The Chinese have certainly put the philosophy into practice. An intriguing article in the Wall Street Journal at the end of last year by James Areddy and James Grimaldi, described the deep intermingling of China’s richest men with the Communist Party. For example, Liang Wengen, who owns a major construction equipment making firm and whose personal wealth is estimated at $7.3 billion – billion! – is a member of the key political body, the Communist Party Congress. Overall, the elite political institutions in China have no fewer than 160 individual billionaires as members.
The superrich are not shy when it comes to lobbying. For example, they routinely negotiate their companies’ tax bills with the authorities. Mr Zhou Haijiang, leader of a massive clothing business, boasts that every time he meets the Party leadership, he exhorts them to reduce taxes.
American politicians are frequently accused of being rich elitists, out of touch with ordinary people. But compared to the Chinese, they are paupers. Estimates of the total personal wealth of all 535 members of the US Congress vary. But they are at the very most no more than the $ 7 billion fortune of Mr Liang Wengen alone.
They may castigate their politicians, but Americans remain intensely relaxed about individuals acquiring stupendous amounts of money through legitimate business activity. Eric Schmidt, Executive Chairman of Google, has just announced a plan to sell off rather less than half his shares for some $1.6 billion. The wealth of Facebook founder Mark Zuckerberg varies from day to day, but is of the order of $10 billion. And Bill Gates’ charitable donations alone dwarf this figure.
It is no accident, as the Soviets used to say, that massive personal fortunes can be built from start up businesses in both America and China. These are the two dynamic drivers of the world economy. Both their cultures, in their different ways, admire and reward entrepreneurship.
The contrast with Europe is stark. The events in France have brought this into focus. Holland’s proposed 75 per cent tax rate admittedly only applies to incomes of more than 1 million Euros a year, but it is symbolic. The very French pop star Johnny Hallyday has castigated his own country, claiming that it ‘breeds mediocrity’.
As in many things, we in the UK sit uneasily between America and the rest of Europe. We have, for example, the fantastic example of the innovation culture in Silicon Roundabout. But we need a culture which encourages these entrepreneurs to build vast fortunes, without the risk of being hauled before the tricoteuse of the Public Accounts Committee, Margaret Hodge MP, and castigated for their efforts.
As published in City AM on Wednesday 13th February 2013