Ray Dalio, a hedge fund manager who has served as co-chief investment officer of Bridgewater Associates for the best part of four decades, recently heaped praise on China’s drive toward “common prosperity.”
If the United States is to narrow the country’s yawning wealth gap, Dalio, worth somewhere in the region of $20 billion, believes the government should adopt a similar policy to Beijing’s. But Dalio is wrong. Here’s why.
Before going any further, it’s important to get our definitions in order. According to Chinese Communist Party (CCP) leader Xi Jinping, “common prosperity” is inextricably linked with socialism. This alone should ring alarm bells. One needn’t be a historian to recognize the dangers posed by socialist policies. There’s something rather amusing about a billionaire who has quite literally profited from capitalism advocating for “communist-lite” initiatives. But back to the definition: “Common prosperity” involves “reasonably adjusting excess incomes,” to quote Xi, and pressuring society’s highest earners into making more charitable donations.
According to Dalio, Xi’s desire to redistribute wealth is laudable. In reality, it’s not. We should be immediately suspicious of anyone advocating for CCP-backed policies. The United States is not China. Even if the push toward “common prosperity” proves to be a success in China, there’s every reason to believe that it would be a catastrophic failure at home.
“Common prosperity” is closely associated with the idea of wealth taxes. Ostensibly by robbing from the rich, a government can then give more to the poor. However, wealth taxes do little, if anything, to address income inequality, the very thing “common prosperity” attempts to address.
As Ike Brannon, a senior fellow at the Jack Kemp Foundation, has noted, a U.S.-based “wealth tax would do nothing to help low-income earners while hurting the rest of the economy. Wealth taxes are difficult to administer and—more importantly—invariably reduce savings, investment, productivity, and economic growth.”
In other words, such a tax would hurt the country rather than help it. We already know that healthier, freer societies benefit from less government interference—not more. “Common prosperity” involves greater government control–not less.
Another key feature of “common prosperity” involves philanthropy. In China, among the nation’s highest earners, charitable giving is at an all-time high. With pressure from Beijing, China’s wealthiest people have little option but to donate to charitable causes. Saying no to the CCP is not exactly an option. As someone who once lived in the country for a number of years, I say this with a high degree of certainty.
In China, whether such philanthropic efforts end up benefiting the least well-off remains to be seen. In the United States, however, we already know that philanthropy regularly benefits the rich rather than the poor. As the writer Paul Vallely previously wrote, “philanthropy, it is popularly supposed, transfers money from the rich to the poor. This is not the case.”
In the United States, the most philanthropic nation on the planet, “barely a fifth of the money donated by big givers goes to the poor,” Vallely wrote. Where does the rest go? The “arts, sports teams and other cultural pursuits,” as well as various educational institutes. But not just any educational institute (or sports team, or cultural pursuit). As Vallely noted, donations tend to go “to the elite universities and schools that the rich themselves had attended.” Philanthropic donations actually serve to preserve the status quo.
Moreover, as Vox’s Kelsey Piper noted, “In the United States, if you donate money to charity, you can “deduct” it on your taxes—unless you’re poor, that is. Charitable tax deductions appear to be rigged in favor of the wealthy. This is not a glitch in the system–it’s intentional.
If the United States were to implement something like “common prosperity,” who would introduce it? The very people currently engaged in insider trading, quite literally feathering their own already well-feathered nests. The very same people pushing for vaccine mandates. The very same people calling some of the least privileged people in the country “privileged.”
Would you trust these people to roll out a fairer system, one that benefits the poorest people in society? Maybe you would. But plenty of people wouldn’t, and for good reason.
Instead of adopting communist-friendly policies, how about targeting Big Tech companies that continue to use loopholes to avoid paying billions of dollars in taxes? Instead of targeting specific individuals, how about targeting specific, monopolistic monstrosities, especially those that work to strengthen the CCP? America should be exploring ways of decoupling from China.
In the United States, fundamental changes are required—but a push toward “common prosperity” would only make things worse.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.