One of the great tyrannies of the stock market is the quarterly reporting cycle. Public companies routinely cut off their corporate noses to spite their corporate faces[1], prioritizing extreme short-term results at the expense of longer-term company health and sane, sustainable planning.
Why? Because today’s CEO knows that if he angers today’s shareholders, it’s highly likely he’ll be yesterday’s CEO and replaced by someone else. And CEOs, more than anything else, can be counted on to act in their own self-interest. Collecting giant compensation for as long as possible[2] is the name of their game.
It is identical to the dynamic that drives politicians. Their foremost concern is getting elected, and then re-elected. So they will say and do whatever they have to, inconvenient truths easily discarded for out-and-out lies that increasingly fool an ever-lazier, less-engaged voting public[3]. They will employ drastic short-term measures (and fiat currency manipulation, by definition, is a doomed-from-the-start short-term measure) that are incalculably damaging to countries and societies over even the medium term, and absolutely, unquestionably will ruin them over the long term[4].
But what if you’re in office for life? Such is the reality of Chinese president/strongman/emporer/call-him-what-you-will Xi Jinping. He has a huge political upper hand against an adversary who needs to worry about getting votes in a couple years. He can afford to play 3D chess against other heads of state playing checkers. So why isn’t he doing so?
The prime directive for any ruling Chinese leader is to avoid a Tiananmen Square redux at all costs[5]. So while he needn’t worry about getting votes, the ghosts of relatively recent, violent societal upheaval drive similar behaviors to Western leaders. Namely, an...