Controlling state enterprises rewards a few, but far too few:
China has a related but different problem. Its politicians control too much of the money themselves. Politicians and elites in China enrich themselves, their friends, and their families by managing and siphoning China Inc., China’s state capitalist enterprise. Chinese industry is controlled by the state, and thus it is the property of the people who run the state. Last year, state-owned enterprises and affiliated businesses accounted for over half of Chinese economic output and employment. There were 70 mainland Chinese companies on the 2012 Fortune Global 500 list; 65 of those were state-owned.
As an example, look no lower than China’s People’s Congress. The United States’ House of Representatives and Senate has no billionaires. China’s parliament has 83. According to Bloomberg, “The richest 70 members of China’s legislature added more to their wealth last year than the combined net worth of all 535 members of the U.S. Congress, the president and his Cabinet, and the nine Supreme Court justices.” If you’re part of the state, state capitalism is the best, even if the system is centralized, corrupt and calcified.