Crony capitalism seems to be getting worse. In China the SOEs call the tune: they suck up capital from the private sector and refuse to pay dividends to SASAC, the government body that nominally oversees them. Many of India’s dozens of billionaires made their fortunes in industries such as mining and infrastructure that are prone to rent-seeking, even if the most famous are in relatively politics-free ones such as computing.
This all matters more than it used to. The emerging world may be slowing but it now accounts for more than half of global GDP (using purchasing-power parity) compared with less than a third two decades ago. And SOEs strut the global stage. A quarter of the companies on the latest Fortune Global 500 list are from emerging markets, up from 15% in 2010. Of these, 58% are Chinese SOEs. The government has set them a target of getting half their profits from abroad in five years, up from 38% now.
The Anglo-Saxon world looks askance at Mr Berlusconi’s mixing of business and politics, and at the French phenomenon of pantouflage, in which senior civil servants move on to cushy jobs in business. But its superior attitude is misplaced. In Britain the revolving door is spinning ever more rapidly. Over the past decade 18 former senior ministers and civil servants have taken jobs with the biggest three accountancy firms, whose work includes helping businesses minimise their tax bills and lobby the government. They include Dave Hartnett, until last year the head of the revenue service, now a consultant at Deloitte. The boards of British energy firms are packed with ex-ambassadors and ex-spies.
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