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Tales of easy money violate work ethic
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I called one of nephews recently who lives in Shenzhen, in south China’s Guangdong Province.
This young relation of mine had been visiting my hometown in Jiangsu Province and I was phoning to make sure he had returned safely and would not be late for work due to his travels.
“Right now I’m discussing an investment with mother,” he replied, without saying anything about his job.
As a matter of fact, over recent months, this young man’s job has become quite insignificant compared to what he saw himself gaining from his stock investments. He isn’t the only one being distracted.
These days, one doesn’t have to go far to hear stock trading tips and supposed pieces of “insider information.” Fruit sellers, taxi drivers and even the country’s ubiquitous “dancing grannies” are ready and willing to give advice on where you should invest your money.
Everybody, it seems, is making money and has stories to tell about vast fortunes created in China’s booming stock market.
When my father-in-law visited us recently, he mentioned a distant relative who had cleared tens of millions of yuan in a matter of months, all with an initial investment of just 3 million yuan (US$480,000).
This sum is a mere trifle, though, compared with what wealthy elites can make in a single day. Movie star Zhao Wei, for instance, is said to have seen the value of her stock portfolio increase by 7 billion yuan on June 1.
Keep the bulls running
Similar stories of windfalls are eagerly shared and shared again, making chaogu (literally “stirfrying stocks,” or stock speculation) a national craze.
Such tales of easy money seem to be paying off, with one calculation last month suggesting that the ongoing exuberance had already made the average Chinese investor 150,000 yuan (US$18,000) richer.
Amid the current clamor, few seem to remember that only a lucky few escaped with their profits intact when the market’s last spectacular boom went bust. Similarly, few seem receptive these days to observations that the market itself does not create real value. Talk of economic fundamentals is also passe.
It’s understandable why few would want to heed words of caution. After all, there appears to be a national mandate to keep the bulls running, as various state organs and a long string of media reports conspire to push A-share prices higher and higher.
It has been widely conjectured that policymakers believe the current market boom will give China’s slowing economy a badly-needed shot in the arm.
At the moment the economy is in a delicate situation. Traditional sectors have lost steam, while expected economic transformations have yet to fully materialize. The government believes, according to one analysis, that the market boom could add up to 1 percentage point to GDP growth.
As more and more small investors get coopted into this massive game of wealth creation (or transfer), we are losing sight of the time-honored principle that true wealth and happiness are achieved only through honest labor.
New code of morality
Many young investors (like my nephew) might have no memory of the previous stock crash a few years ago. And whatever principles of morality they might have entertained during their school years risk being abandoned — as such principles clearly contradict the frenzied logic of the current stock boom.
A new code of morality — strictly pragmatic — is emerging. It is based on the needs of a calculated economic reality where moral rectitude must give way to material interests. Naturally, such notions lead to new priorities when it comes to education.
In today’s universities the most successful students go into banking and finance, while underachievers fall into “mundane” disciplines such as philosophy. Needless to say, many people no longer view philosophers as particularly useful — let alone inspiring.
Plato famously viewed philosophers as the best rulers, for they have access to “ideas.” He observed in “The Republic” that “[A] true pilot must of necessity pay attention to the seasons, the heavens, the stars, the winds, and everything proper to the craft if he is really to rule a ship.” The conventional wisdom of today, though, assumes that a ship can navigate simply by exciting the greed and avarice of all those on board.
At the beginning of China’s opening-up era some three decades ago, there was the slogan that “getting richer by honest labor is glorious.”
As we allow our lives to be guided by baser impulses, we began to view moral scruples as ephemeral, transient or in need of amendment.
Today there is a real danger that “getting richer” itself — without any reference to principles — is the only imperative that can still inspire.
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