Democracy and the Markets
While advanced economies in the West tend to give bankers and companies a mere slap on the wrist for corruption and market manipulation, China appears to have taken a much harsher stance.
Just a few days ago Rolls Royce Plc was found guilty of major international corrupt practices, spanning decades long. The UK government and Rolls Royce Plc settled out of court the matter with a fine of GBP 671 million (US$836 million). No one went to jail. The company did not go broke. No real pain. The market in fact reacted positively to the settlement with a 7% surge in Rolls Royce Plc shares!
In contrast, China has just sentenced a famous hedge fund manager to five and the half years jail along with his two other accomplices. China also fined and confiscated the entire illegal profits made. In addition to jail terms, the three had to pay a combined fine of US$1.76 billion (Rolls Royce Plc, a company many, many times richer, paid less than half of that). By China’s standard, they are lucky not to have been executed by firing squad.
These two stories tells a perverse narrative about democracy and the markets. How could it be that Communist China treats its people more equally than Western democracies? What does it really tell us about the 1% that lord over the global democracies?