Bo Xilai was expelled from the Communist Party in China last week amid a bevy of scandals that included theft, abuse of power, sexual improprieties and murder. Bo's wife, Gu Kailai was recently convicted of murdering British businessman, Neil Heywood. The British businessman is thought to have helped Bo and his wife smuggle anywhere from $130 million to as much as $1.2 billion out of China. Apparently, he got greedy, or Gu got possessive, since they were romantically involved as well. Either way, Mr. Heywood was comfortable enough with his relationship that he drank poison slipped to him while staying at the Lucky Holiday Hotel.
Bo Xilai was the fourth child of Bo Yibo, a leading communist, who fell out of favor in 1965 for advocating more open relationships with the west. Consequently, Yibo spent 12 years in prison, but he emerged later to become a part of the very powerful Eight Elders also, known as Eight Immortals. He led the push for economic reform in the 1980s, which changed the economic face of China in a push that has made it the second largest economy in the world with eyes on being number one in short order. The son rode his father's coattails, but amazingly, not his philosophies.
Fast forward and Bo Xilai is in charge of Chongqing, one of five national cities in China, which was created through the combination of four major cities. This megacity theme is one that communists' and socialists' dream as a mean for controlling people and resources. It's the backdrop of all utopian dreams. Bo used this municipality of 32,000,000 people to conduct a grand experiment called the Chongqing Model of state-run capitalism. On the surface, his experiment was amazingly successful. However, like any scheme based on massive spending, there were serious cracks beneath the surface.
Prodigious Charisma & Deep Intelligence
A few years ago an article in the New York Times said Bo possessed "prodigious charisma and deep intelligence" but noted his heavy use of propagandistic tactics. That propaganda was Mao's words and thoughts with the aim of moving China back to a purer form of communism. In Chongqing, Bo led singing of Red Songs preaching the virtues of Maoism. In fact, there would be assemblies of 100,000 people gathered to sing Red Songs, often aired on local televisions without commercial interruption. With the media on his side, the charismatic Bo only needed a couple more things to seal the deal-redistribution of wealth and complete silencing of his critics.
In a few short years, Bo spent $15.8 billion on public apartment complexes for recent college graduates, migrant workers and low income citizens. In 2011, revenues in Chongqing climbed 51%, giving the appearance of financial success, but spending was up 45%, and most private economic activity was land speculation aided by the government evicting farm owners. In the meantime, Gu's sisters controlled businesses worth $126.0 million, while Bo's son is estimated to have hauled in $740.0 million. Yes, once again a promoter of redistribution turned out to be as greedy as any capitalist that actually earns wealth legally.
Just as media was all in for Bo Xilai, it's impossible to watch a movie, television or even listen to radio where opponents of Barack Obama aren't snuffed out swiftly and with deadly intentions. In the meantime, the Red Songs of collectivism and anti-capitalism are spun by those that make millions doing things with limited job-creation, like making bad movies or vile music. They must see themselves as the favorite sons and daughters like Bo's kin, able to be richly rewarded while trying to dismantle the system that made them rich in the first place.
The folks in Hollywood collectively haven't helped as many people as Mitt Romney has, but they would have the world believe they're virtuous, while he's only shipped jobs overseas. While Hollywood takes in gobs of investment money from China, India and the Middle East, they portray American businesses earning money abroad as villains. Hollywood, as a place that could make a difference through movie-magic, is vanishing quickly, replaced by one-sided views, boring scripts and tired special effects. Hollywood is working overtime to erase God and morality from America. The good news is they are so awful at their craft; it's taking a while to happen.
High Cheekbones of Mongolians and Indians
Just as Elizabeth Warren is sticking to the wild story of being part American Indian, Bo Xilai's henchman posed as a Mongolian to gain favor and opportunities. Wang Lijun was the police chief of Chongqing and Bo's right-hand man. Born a Han (largest ethnic group in China), along the way he took to saying he was Mongolian as a means to take advantage of a decree from the 14th National Congress to "take care of ethnic minorities." I guess Wang had high cheek bones and heard stories from his grandmother.
Wang panicked after the Heywood murder. Fleeing to the American consulate, Wang spilled his guts hoping to get out of the country. Bo sent seventy police cars and waited out Wang for three days. Wang eventually left, but not until the bizarre story was an international sensation.
Implications for America
There are a ton of parallels to the Bo Xilai story and America's current political climate. America is being asked to forsake the kind of capitalism that made it the greatest country the world has ever known for state-lead capitalism. In order to make this appear even remotely successful, there will have to be the plundering of American businesses.
The fact that Bo Xilai was expelled from the Communist Party just a couple of years after it appeared he was a shoo-in for the nine-member Politburo Standing Committee underscores China's need to further embrace capitalism rather than be swayed by romanticism associated with the lure of Mao. That's great news for those that see the threat of a trade war brewing. I'm not mad at China for embracing capitalism, I'm mad at America for moving away from it. In the meantime, President Obama has shutdown a deal for a Chinese company to own four wind farms.
Going to War over Love
One of the greatest wars in the history of mankind came with the abduction of a king's wife and ended years later with a wooden horse. Love was enough to spark a war between Troy and Greece. Today, America is prepared to go to economic war with China over the administration's love of solar and wind energy. Last Week, President Obama stopped the purchase of four wind farms, suggesting it presented a national security risk because of the proximity to an Oregon military base. Once again, the media closed ranks and echoed the story of how these farms were too close to the naval base known for drones and other electronic warfare equipment.
There are many reasons to go to the mattresses against China, but wind farms and solar panels are the dumbest. There is already a 31% tariff on Chinese solar panels, and now this wind farm news. The economics is silly as it's a drop in the bucket compared to what American businesses lose each day to piracy and theft in China. This action isn't getting tough on China, but a farce made to look tough to the public ahead of an election and to protect American companies in an industry struggling to compete with Chinese rivals.
I haven't read or heard anyone talk about the positive implications of Bo's expulsion from the Party and the upcoming trial on our economy, but it's huge. The idea is to tap into 1.2 billion people, and to do that effectively, our government needs to put more pressure on China to open up to American businesses. Perhaps a second term would see that, but only if American businesses give up a piece of the action. It's how state-lead capitalism works. Take a piece of the action, sprinkle crumbs on the masses while the main players get fat and powerful.
They say Bo was ruthless, and the only thing that appears to have derailed him was unbridled greed.
It's hard to believe, but the Chongqing Model may sweep America before it sweeps China.
This is a huge week, or so it would seem, for the stock market, elections, and economic implications. Last week saw a lot of major news, mostly from Europe, but also from China, too. In fact, for reality-television show loving Americans, the news from China was juicy and scandalous. Events there also say much about the infectious embrace of capitalism outside of America and Western Europe. The news also underscores the connection of charisma and flawed ideology.