Guideposts: The Chairman Blinks Twice

You are receiving this email because you signed up to receive our free e-letter Gilder's Guideposts, or you purchased a product or service from its publisher, Eagle Financial Publications. [Gilder Guideposts] [Technology Report]( [Tech Report PRO]( [Moonshots]( [Private Reserve]( Guideposts: The Chairman Blinks Twice by George Gilder and Richard Vigilante 06/21/2023 SPONSORED CONTENT [The #1 stock for 2023]( Investment expert Brad Thomas knows how to pick stocks. He bought Starbucks back in 2006. He bought Nike in 2003. And he and his team delivered a perfect track record from March 2020 to September 2022. Now, for a limited time, he's revealing his #1 stock for 2023... [Get its name here.]( On the campaign trail in 2000, George W. Bush, commenting on China’s future, noted “once a measure of economic freedom is permitted, a measure of political freedom will follow.” Today, GOP China Hawks partly regard Bush as intolerably naïve. Former House Speaker Newt Gingrich, their intellectual leader, chides, we now know such hopes were “rooted in nothing more than fantasy.” Yet over the past six months, we have seen at least two examples of a Chinese Communist Party (CCP) desperate for popular support. First came Chairman Xi’s about-face on Covid lockdowns, which in China had reached the extreme of padlocking entire apartment buildings to keep the residents indoors regardless of any evidence of infection. When emergency vehicles could not get through for sick residents and people forbidden from going to shops started running out of food, riots ensued. The first CCP reaction was predictable: arrests, police violence, and stricter confinement. Then after several weeks came a dramatic reversal: by the Chairman’s order the lock downs were lifted, stores and offices and factories reopened, life began to return to normal. For Xi, relenting was risky. Everyone in China would know he yielded to public pressure. Xi had clung fiercely and publicly to the lockdowns, which allowed him to brag about China’s allegedly low infection rate—probably faked—compared to countries taking less repressive measures. Forced to back down, still he could not concede what everyone knew, that the CCP was terrified of the most serious public revolt since Tiananmen Square. Instead, ending the lockdowns was represented as a shift in priorities toward reviving the sagging Chinese economy. Within months, that reversal precipitated another. Having proclaimed that economic growth was the new priority, the regime was dismayed to discover it was not happening on the scale hoped for. In desperation, the government has announced a reversion to massive fiscal stimulus, spending on big infrastructure projects and encouraging real estate speculation it once condemned. Significant is not only the government’s anxiety to appease a discontented populace, but the extent to which the fiscal stimulus reverses another cherished policy of the Chairman’s. Xi’s chief weapon in consolidating power were his anti-corruption campaigns typically ending in the arrest, disgrace, and sometimes execution of his political opponents. [Learn how to predict the future of technology with our “paradigms”]( Technology is always evolving. Nobody knows what direction it might go until it’s already here. But what if you had a roadmap that has accurately predicted the future of technology for more than 40 years? My flagship service Technology Report has been guiding my subscribers through the technology market for years now. If you want to learn more about investing in technology companies, [click here now.]( We don’t doubt corruption was rampant; government spending on infrastructure on the scale China pursued for decades guarantees massive fraud. Going back to big spending, Xi must know he is creating new opportunities for the corruption he made his bones opposing. The obvious motive for this concession is that the regime is frantically fearful of popular discontent. Another, not unrelated, is that providing new opportunities for corruption might win Xi additional support in the provinces. The Wall Street Journal reports increasing panic among local officials, including fears of provincial and municipal bankruptcies. Rake-offs on building projects would ease that problem as well as enriching the officials. And more corruption invites more prosecutions for corruption: another weapon to keep locals in line. It should not surprise us that dictatorships crave public approval. Most such regimes have vigorous internal politics that sustain a coalition of sorts, keeping the leader in power. Waning public support can make it much harder to keep the coalition together. Xi has long aspired to become a new Mao—or Stalin—and free himself from the need of such support. Yet even Mao never entirely succeeded making coalition-building unnecessary. In the wake of the Great Famine, he came close to being deposed by his colleagues. He responded with mass murder, evoking the cultural revolution which sidelined—or eliminated—his enemies. Deng Xiaoping reacted to the greatest challenge against his rule by ordering the army to fire into a crowd of students, killing hundreds, perhaps thousands. Xi has responded to his challenge not by mass murder, but by publicly reversing two of his most cherished policies. This also should not surprise. As more of the population becomes both personally prosperous and crucial to sustaining the economy, they inevitably gain political power, even if they lack institutionalized means of wielding it. In always surprisingly decentralized China, the policies that brought about the Great Famine were enforced by a cadre of local officials, not very powerful, yet strong enough to bully starving peasants accustomed to feudal servitude. Today across China, a growing bourgeoisie subsists in mutual dependence with the successors of those local officials. If the businessmen have much to fear from the officials, the officials have much to gain from the businessmen, including bribes and jobs for their children. No regime could impose a Great Famine on China today and survive. Local officials depend on the prosperity and goodwill of the prospective victims. One might observe even that “once a measure of economic freedom is permitted, a measure of political freedom will follow.” [Your Invitation to the Most Important Active Trading and Investing Event of the Summer]( As companies continue to make AI-related layoff announcements, it's more important than ever to invest in skills that will provide independence and financial stability. Join us and 60+ trading and investing experts at the upcoming July Wealth365 Summit from July 10th-15th. With the bank crisis still topping headlines and the housing market signaling a slowdown, there is no better time to join the Summit and equip yourself with the tools you need to protect and manage your finances. [Reserve your seat here.]( *** Of interest to tech investors Did Micron’s anti-China lobbying provoke sanctions? [( China’s ban on Micron memories seemed a little arbitrary. Maybe not. More to the Micron story from Chinese TV: [( Of course, the aggrieved Chinese media covered this story and, of course. U.S. media was uninterested. AI is both accelerating demand for connectivity and helping to fulfill it. [( Another example of why we believe the Microcosm is at an inflection point of explosive, self-generating growth. How the cable guys will deliver 10 gigs to your home, cheaply, years before you will need it. [200-per-home-passed/d/d-id/781785]( This story is from last year, but worth a look today. $200 per home passed for 10 Gbps! The telcos are so toast; but you knew that already. Exclusive Offer Only Available to George Gilder’s Newsletter Subscribers: For a limited time, get 50% off when you buy George Gilder’s new book, "Life after Capitalism," by [clicking here]( now. Use code AFTER50 at checkout. In "Life after Capitalism," George Gilder redefines capitalism for a modern age, explaining how free enterprise is a mind-driven system, that material resources are as infinite as the atoms of the universe and what governs economic growth is human creativity—not a Marxist class struggle for power. Hurry! This offer ends on June 30. [Click here]( now and use the exclusive code AFTER50 at checkout. P.S. Join me at FreedomFest, “the world’s largest gathering of free minds,” just a month away! I, along with my fellow Eagle Financial gurus, Mark Skousen, Bryan Perry and Jim Woods, will be speaking. The full agenda — speakers, panels, debates and breakout sessions — is now posted online. Go to [www.freedomfest.com/agenda]( to check it out. You will be amazed! You can also click on the name of each presenter to see when and on what topic they will be speaking. [Click here]( to find out more. When registering, use code EAGLE50 to receive a discount. I hope to see you at FreedomFest in “Music City,” Memphis, Tennessee, July 12-15. P.P.S. Join my Eagle colleagues and me on an incredible cruise! We set sail on Dec. 4 for 16 days, enjoying a memorable journey that combines fascinating history, vibrant culture and picturesque scenery. Hear seminars on the days we are cruising from one destination to another, as well as dine with members of the Eagle team. Places we’ll visit include Mexico, Belize, Panama, Ecuador and more! [Click here]( now for the details. Sincerely, [The Editors] George Gilder, Richard Vigilante, Steve Waite, and John Schroeter Editors, Gilder's Guideposts, Technology Report, Technology Report Pro, Moonshots, and Private Reserve About George Gilder: [George Gilder]George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives. 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