China gets a lot of criticism for its bullying of other countries. But in many ways, the US is even worse. China tends to bully by threatening to do less trade when foreigners say things they don’t like. Everyone from Australian government to the NBA has been on the receiving end of Chinese government threats. But in the end, it’s possible to ignore those threats. Australians continue to criticize China. NBA players still have the freedom to criticize China (if they are willing to give up a bit of money.)
The US bullying is even worse. The US basically demands that other countries do what we say. Here’s a recent example:
Washington, D.C. — The Commodity Futures Trading Commission’s Division of Market Oversight (DMO) today announced it is withdrawing CFTC Letter No. 14-130 effective immediately. When DMO issued the letter on October 29, 2014, it took a no-action position with respect to the operation of a not-for-profit market for certain event contracts and the offering of such contracts to U.S. persons by Victoria University of Wellington, New Zealand without registration as a designated contract market, foreign board of trade, or swap execution facility, and without registration of its operators. [See CFTC Press Release No. 7047-14]
DMO has determined that Victoria University has not operated its market in compliance with the terms of the letter and as a result has withdrawn it. As stated in the withdrawal letter issued today, to the extent that Victoria University is operating any contract market in a manner consistent with each of the terms and conditions provided in CFTC Letter 14-130, all related and remaining listed contracts and positions comprising all associated open interest in such market should be closed out and/or liquidated no later than 11:59 p.m. (EDT) on February 15, 2023. [See CFTC Letter No. 22-08]
Prediction markets are one of the few useful innovations to come out of the financial industry in recent years. We need many more of them. (Rajiv Sethi has a good post on this.)
It would be a terrible mistake for the US government to shut down a US firm operating prediction markets. Demanding that a New Zealand market cease operation is even worse. What right do we have to tell the Kiwis how to run their economy?
The US routinely forces foreign governments to bend to our will by threatening to shut them out of the global banking system. As bad as China’s bullying is (and it’s very bad), the Chinese have nowhere near this much power. I cannot even imagine the CCP demanding that New Zealand shut down this market.
PS. The FT has a good article explaining how fools in Washington and Beijing are blundering toward what could end up being a catastrophic war.
PPS. And then there’s Russia, which is a far worse bully than either China or the US. The world seems determined to replay the first half of the 20th century. Remember a decade ago when all sort of so-called intellectuals were complaining about globalization? Welcome to the world of nationalism.