Omicron Comes After Xi

The Greek alphabet isn’t that confusing. Neither is reality.

Less than three months after Chinese president Xi cracked down on technology and education companies in the country, a new Covid variant is creating an even bigger disaster for their economy.

Just like in the Greek alphabet, Omicron is coming after Xi.

This is one example of why U.S. policy decisions should be deliberate, consistent, and sustainable. It’s also one example of why capitalism will always defeat socialism in the long-run.

Capitalism offers more diversified decision making.

Centralized decision making is fast and powerful. Xi was able to destroy wide swaths of the Chinese economy by simply announcing a new policy. At the time, it probably seemed to him as an efficient means to an end. He wanted to consolidate power. By removing the influence of the country’s billionaire class, he was able to quickly pave the path toward a lifetime dictatorship.

But centralized decision making is also universal and destructive. What seemed like a good idea to Xi at the time, now has him crying about his short-sightedness.

When Covid was subsiding and the global economy was reopening, he had the political and economic might to push through his personal agenda.

Now that Omicron is shutting down his country, it threatens to push him into exile.

It’s early and some of this is purely conjecture, but it would be wise for decision makers to heed the warning.

Diverse markets are chaotic and decentralized authority is often unpredictable. But when you let people make their own decisions (whether economic, religious, physical, or political), they can move faster when unforeseen calamities strike.

But when one person makes the decisions, one person gets all the blame.

U.S. companies should learn that lesson well. Allow your people to make good decisions without too much corporate interference. Set the standards and guardrails. Create the culture. Then get out of the way.

Because the Chinese people could handle Omicron on their own. My bet is they will handle Xi on their own too.