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How China Became So Powerful - YouTube
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back in the old days
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this part of the world used to be the
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economic superpower
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of the planet there were dynasties that
[9]
discovered everything from the compass
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to printing to making paper to gunpowder
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they would lead
[16]
huge expeditions around the globe this
[18]
was
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china the middle kingdom and right next
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door india
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this was the center of the global
[26]
economic universe
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but around the 1800s that started
[30]
changing
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over here in europe and the united
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states there was a major
[37]
revolution that started taking place
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science then machines then weapons
[44]
trains cars flight bombs
[47]
factories cities and with their new
[50]
power these countries
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started to expand to take over large
[54]
swaths of the map
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china remained a great civilization but
[58]
as the west
[59]
started showing up knocking on china's
[61]
door with their big
[63]
guns china couldn't really match their
[65]
firepower
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and they had to concede land to britain
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which is how we got hong kong
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the industrial revolution didn't really
[72]
happen in china the same way it did in
[74]
the west
[75]
and by the middle of the 1800s china
[77]
began a massive decline
[79]
in its economic standing in the world a
[81]
century later that situation got way
[83]
worse
[84]
as china was invaded by its neighbor
[86]
japan china's economy was no longer the
[88]
prosperous middle kingdom
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but rather a shadow of itself a poor
[93]
country that was being occupied by
[94]
outsiders
[95]
once world war ii was over the west
[98]
devised a new global economic and
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financial system
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it was modeled after the economic system
[104]
that was working so well in the west
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capitalism free enterprise still with
[109]
some government oversight
[111]
and high taxes for the rich and
[112]
corporations but it was still capitalism
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and after the war this capitalism would
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go on to become
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a miracle for many countries rebuilding
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germany
[121]
france japan for many in the west
[124]
post-world war ii capitalism was like a
[127]
magic
[127]
elixir that was fixing everything it was
[130]
working so well that
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more and more people started to believe
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that we needed to get government
[135]
out of capitalism and let the market
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just do its thing
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one of the major advocates for this idea
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of unfettered capitalism
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was this guy never in history been a
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more effective machine for eliminating
[148]
poverty than the free enterprise system
[149]
in the free market
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a chicago-based economist named milton
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friedman
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if they fail they bear the cost if they
[156]
succeed
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they get the benefit the idea at the
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core
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of this financial and economic system
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was that
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companies would get investment from
[167]
people who own shares in that company we
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call this a corporation
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and that the sole purpose of this
[172]
corporation was to make money
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for these owners or these shareholders
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in milton friedman's own words
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quote the social responsibility of a
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business
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is to increase profits that is the role
[184]
of a business
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increasing short-term gains for
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shareholders
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would benefit all of society according
[190]
to this model
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and if you look at the data in the
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united states and the west
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milton friedman sort of had a point
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and it led to huge prosperity in the
[201]
west
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as the u.s economy exploded
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wait a minute but what about china are
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we talking about china and its economy
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you know
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the middle kingdom china so while the
[211]
u.s and western economies are thriving
[213]
because of this corporate
[214]
free market capitalism that was taking
[216]
over the world china was descending
[219]
further and further into decline instead
[221]
of joining the capitalism party that the
[223]
west was spreading throughout the world
[225]
china resisted turning to a one-party
[229]
rule
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communist system headed by this guy
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mao zedong who destroyed any chance
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of china's economy ever joining the
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prosperity happening around the world
[239]
by the 1970s china was a place of
[242]
widespread poverty
[243]
the once prosperous kingdom had reached
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rock bottom
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but that was all about to change
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so it's the 1970s and this is china's
[255]
new leader
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deng zhao ping he came into power
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hoping to turn around this 150 years
[262]
of humiliation in china the decline of
[265]
china as a superpower elsewhere in the
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region china's neighbors
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had economies that joined the global
[272]
economic party that was happening
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in capitalism and they were thriving
[277]
they saw immense
[278]
economic miracles and pulled millions
[280]
out of poverty deng
[282]
specifically went on a visit to
[283]
singapore early on in his term
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where ethnic chinese had adopted the
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free market
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and they were thriving he felt inspired
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the maoist economic doctrine that had
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failed
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was over and it was time to see if china
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could rebuild its economy
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experimenting with some version of
[304]
capitalism but he had to do this
[305]
carefully so as not to disrupt the
[307]
one-party rule that china had created so
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he decided to just focus on
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one little village a sleepy village in
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southern china
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of just around 30 000 people right
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across the border from the british
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controlled hong kong
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which at the time was thriving because
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of its hardcore capitalistic economy
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deng xiaoping designated this little
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town as
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quote a special economic zone where
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foreign companies could set up
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and invest in a very capitalistic
[337]
free market hong kong would sort of act
[339]
as a bridge
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between western businesses and this
[343]
little gateway
[344]
into communist china it was still
[345]
socialism but with some
[348]
chinese capitalistic characteristics
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what happens next is arguably the most
[354]
mind-blowing economic miracle ever to
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have taken place
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on planet earth
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this little sleepy village that was a
[365]
special economic zone in china
[367]
exploded from a little fishing village
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with
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a little more than a few thousand people
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and some rice paddies to a massive
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city of over 10 million people the
[378]
average income went from one dollar a
[380]
day
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to over thirty thousand dollars a year
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this starts happening all over china and
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meanwhile
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milton friedman's back in the us being
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like
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yep told ya soon there were a bunch of
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cities designated in china
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for special economic activity or
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basically capitalism in a socialist
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country
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and more and more foreign companies
[403]
flocked to china
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for its cheap labor it became the
[406]
world's factory
[408]
china joined this trend of other asian
[410]
economies
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and eventually passed them up to become
[412]
the second largest economy
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on earth you can see this in a graph
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this year asia will actually
[418]
pass the rest of the world in accounting
[420]
for more than 50
[422]
of global gdp it is a massive economic
[424]
transformation
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and it explains why china has become so
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powerful
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okay but wait this is a very wonderful
[432]
story about capitalism and its ability
[435]
to lift millions of people out of
[437]
poverty
[438]
and to industrialize a country seemingly
[441]
overnight
[442]
but there's another side to this coin
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that we need to talk about
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i have two graphs i want to show you
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they look like this okay let's look at
[454]
this one
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first it's called the elephant graph do
[457]
you sort of see why
[459]
let's deconstruct this graph and try to
[462]
understand
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what this says about the past 30 years
[466]
of the rise of china
[467]
on this axis is everyone on earth
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ranked by their income grouped into
[473]
percentiles
[474]
so these people down here make an income
[476]
that is the 10th
[477]
percentile the lowest 10 in the world
[479]
and then the 20th percentile
[481]
and so on and so on up to these people
[483]
up here who are the richest in the world
[485]
they
[485]
have an income that puts them in the
[486]
90th percentile this axis here
[489]
shows how much growth in income these
[491]
people have had
[492]
over the past 35 years basically during
[495]
the heyday of
[496]
shareholder capitalism and the rise of
[498]
china so you'll see how this plays out
[500]
in just a second
[500]
let's start plotting how much income
[503]
growth each of these
[504]
groups saw over the past 35 years the
[507]
bottom 10 percent
[508]
saw their incomes grow by around 75
[511]
not bad these are people who live in the
[513]
poorest countries
[514]
who make the lowest income in the world
[516]
the 20 to 30 percentile
[519]
saw a huge growth in their income 125
[522]
percent and more over the past 35 years
[524]
this is like the new middle class
[526]
in china and other asian countries who
[528]
saw huge income
[530]
growth due to globalization they did
[532]
really well under this system
[534]
but then you start to get to the people
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in the 50th and 60th and 70th and 80th
[540]
percentile
[541]
this is basically people who live in the
[543]
middle class in the west
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their incomes have grown much slower
[548]
sometimes under 50 percent over the
[550]
course of 35 years which is
[552]
little over one percent a year not very
[555]
much income growth
[556]
and some of these people in the west
[558]
have seen their incomes shrink
[560]
like the blue-collar workers in detroit
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and the rust belt whose jobs disappeared
[564]
to china
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so so far you can sort of see why this
[567]
makes sense
[568]
the people in china who benefited from
[571]
this mass industrialization
[573]
saw huge benefits and the people here in
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the united states and in the west
[578]
who saw jobs go overseas to china
[582]
saw a way slower growth in their income
[584]
but watch what happens next
[586]
when we get to the groups of people who
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are at the 99
[590]
percentile basically the richest 1
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in the world and for this i actually
[594]
have to stretch out the graph to get us
[597]
a little bit more granular
[598]
these are the people who have the
[599]
highest incomes in the world let's see
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how
[602]
their income has grown over the past
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35 years you can see that their income
[610]
has
[610]
exploded under this system they're
[613]
seeing
[613]
tripling of their income in the past 35
[616]
years
[616]
now a reminder that this is 35 years of
[618]
data from every economy on earth
[620]
this shows everyone on the planet so
[622]
this gives us a view of who
[624]
are the winners and the losers of this
[627]
shareholder capitalism that has
[628]
globalized to asia and around the world
[631]
the top 1 of income earners
[634]
saw the biggest benefits from this
[636]
system they are the ones who
[638]
disproportionately benefit
[640]
from shareholder capitalism and the
[642]
growth of globalization
[644]
okay so that's my first graph it's the
[646]
elephant graph
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it is a very useful way to see one of
[650]
the results
[652]
of this version of capitalism and the
[654]
growth of china
[655]
the second graph looks like this
[660]
this shows the amount of co2 emissions
[662]
by country
[664]
you've got europe in the united states
[666]
and then up here you've got
[667]
china the world's largest emitter of co2
[670]
like the elephant graph this graph
[672]
combines loads of data to show us
[675]
that shareholder capitalism focuses so
[678]
much on short-term
[679]
profits for shareholders that it leaves
[681]
out any consideration
[683]
for how this economic activity affects
[685]
the planet we live on
[687]
and our ability to live on it i know
[689]
you've heard this message a bunch
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and if you're like me it is hard to not
[693]
become sort of
[694]
numb to this impending crisis that we
[698]
don't really know what it looks like and
[699]
it feels like there's nothing we can do
[701]
but we have to do everything really
[702]
quickly
[703]
but let me just reiterate in my own
[705]
words that it is now
[706]
a certain fact that our global climate
[709]
is
[710]
changing in such a way that it will
[713]
very likely lead to immense shifts on
[715]
our
[716]
earth and our ability to live on our
[718]
earth it's already happening
[720]
it will continue to happen and
[723]
all we can do now is maybe put on the
[724]
brakes a little bit
[727]
[Music]
[729]
okay let me just wrap this up and give
[731]
you my final thought on what this all
[733]
means
[733]
i'm not showing you all these graphs
[735]
because i'm just like a data nerd who
[736]
loves to look at graphs although
[738]
i kind of am sorry i'm showing you these
[740]
graphs because the story of the rise of
[742]
china is often a story of how capitalism
[744]
has pulled
[746]
tens and hundreds of millions of people
[747]
out of poverty and it has and that's
[749]
amazing
[749]
but these graphs give us a view
[752]
of what it has also done what this
[755]
version of capitalism
[756]
also incentivizes and results in if
[759]
we're going to consider the effects
[761]
of this version of capitalism we have to
[763]
look at
[764]
all of its effects not just some of them
[766]
so what's the solution
[768]
is it socialism no it's not
[772]
it is simply a new version of capitalism
[774]
a reframing of how we think about
[777]
business and globalization one that old
[779]
milton friedman
[780]
would despise and one that more and more
[783]
businesses are
[784]
actually realizing we must adopt the
[786]
solution isn't to scrap capitalism
[788]
altogether
[789]
but instead to expand it to not just
[792]
focus on
[793]
shareholders and delivering them
[794]
short-term profits as quickly and as
[796]
efficiently as possible
[797]
but to also focus on other people who
[800]
are affected
[801]
by the business you can call these
[803]
stakeholders
[804]
this is like the customers and the
[807]
suppliers and the employees and the
[809]
government and the overall economy and
[811]
the planet and of course shareholders
[814]
this is called stakeholder capitalism
[816]
and it's basically just an
[817]
acknowledgement
[818]
that businesses that focus only on
[820]
profits for shareholders
[822]
don't end up benefiting everyone there
[824]
are winners and losers
[826]
it's not good for a huge swath of the
[828]
population
[829]
nor for the changing climate oh and by
[831]
the way this isn't some fringe liberal
[833]
idea
[834]
some of the biggest companies here in
[835]
the united states like walmart apple
[837]
jpmorgan have signed on to adopting a
[840]
new model
[841]
of capitalism this is changing and in
[844]
the next five to ten years
[846]
i believe we will see a new version of
[848]
how businesses interact in the economy
[851]
so you're probably wondering listen i
[852]
clicked on a video about the rise of
[854]
china and we're ending here with
[856]
stakeholder capitalism
[858]
the rise of china is a story of
[860]
capitalism
[861]
a certain version of capitalism it's a
[863]
story about how
[865]
capitalism can morph and change
[867]
depending on what
[868]
effects we want businesses to play in
[870]
our society
[871]
if we want to produce the most amount of
[873]
wealth in the most efficient way
[875]
then the old shareholder model actually
[877]
really works well for that
[879]
but if you want businesses to benefit
[881]
everyone including our children
[883]
and our grandchildren and their ability
[885]
to live on this planet then our
[886]
capitalism
[887]
needs to pull in more priorities than
[889]
just profits for shareholders
[891]
what may be right for one stage in the
[894]
development of an economy may not be
[895]
right for another stage
[896]
the so-called greenhouse effect is
[898]
created by carbon dioxide a colorless
[901]
odorless gas
[902]
so i got to dig through a lot of data
[904]
for this video
[905]
and i was able to partner with the world
[907]
economic forum
[908]
which is a think tank that i respect
[911]
they actually pioneered this idea of
[913]
stakeholder capitalism decades ago
[915]
well before apple and walmart realized
[917]
that it was a good idea
[918]
the head of the world economic forum
[920]
just launched a book
[921]
called literally stakeholder capitalism
[924]
it's an in-depth
[924]
look at not only the rise of asia and
[927]
china but also other major trends that
[929]
help us understand the need to upgrade
[930]
our capitalism
[931]
the book is really good it's packed with
[933]
useful information and graphics
[935]
it's easy to read and to comprehend i'm
[938]
going to put a link in the description
[939]
where you can learn more
[940]
it is available for you to purchase now
[943]
if you want to get a deeper look
[945]
into the future of our economy thank you
[947]
world economic forum for
[949]
partnering with me on this video uh the
[951]
davos summit happened this week
[953]
and um i'm really glad that i was able
[955]
to
[956]
be a part of it so hope you're all doing
[959]
well
[959]
having a good year so far 2021
[963]
there's a new president down the road
[965]
and it's kind of exciting and i'll see
[968]
you in the next one
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