Transcription
Hello everyone and welcome back to our APARC Briefing series. My name is Kiyoteru Tsutsui and I'm the director of the Shorenstein Asia-Pacific Research Center, and today I'm really excited to have as our special guest Professor Kimberly Kay Hoang of the University of Chicago. She is Professor of Sociology and the College at the University of Chicago. To me, she is one of the most interesting, insightful, multi-talented and exciting sociologists working today (outside of the Sociology Department at Stanford, I have to say). And she has conducted some really impressive research, a lot of ethnography on topics that we will cover today: corruption, deal making, how super wealthy, the rich and powerful, maintain their wealth, accumulate more wealth and use that as influence and power.
Her first book that came out in 2015, 'Dealing in Desire: Asian Ascendancy, Western Decline, and the Hidden Currencies of Global Sex Work,' is really a tour de force work of ethnography looking at the social and cultural role of Vietnam's multi-tiered sex industry within the context of the country's regional and global rise. And her second book, 'Spiderweb Capitalism: How Global Elites Exploit Frontier Markets,' which came out in 2022, provides a behind-the-scenes look at how the rich and powerful use offshore shell corporations to corral and conceal their wealth and keep amassing it. And she's extending this line of work, further collecting more really interesting data to look at all the dealing and wheeling that the super wealthy make and how they conceal what they do. So today I am really delighted to have her here. Thank you for coming. Thank you. Thank you for having me.
Maybe we'll start with some quick conversation about the kinds of research that you've done and how you got into them. So for the first book about the sex industry in Vietnam, and then looking at all the spiders of super wealthy who cast a wide net to amass wealth. How did you get entry into those worlds and how did you get interested in them?
Yeah, you know, it's been a long journey of 20 years, and looking back, I think my first book, Dealing in Desire, is an ethnography and I, it's a coming of age book, right? I think a person's first ethnography is their first foray into anything, and I did a really deep dive, I was really interested at the time in sex workers in Vietnam. My family is Vietnamese, they're Vietnamese war refugees, so I also saw it as an opportunity to spend time in my parents' home country and learn about where I come from. And, you know, I started by basically asking for a job to work for free in different hostess bars. And initially I was really interested in questions of human trafficking, questions about, you know, client sex worker relationships. And I happened to be there in 2009, right after the 2008 global financial crisis. And what I uncovered was this broader economic story. And I kind of became an accidental economic sociologist, where what I uncovered was two stories, one of Western decline and the other of Asian ascendancy. But it was playing out in the hostess bars where local Vietnamese men were turning down deals with Western businessmen and taking extraordinary deals from investors from China, other parts of Southeast Asia, like Hong Kong, Singapore, Korea, Taiwan, regional players. And it became a story about deal brokering and the ways in which the sex industry plays a fundamental role in the movement of capital around the world, particularly in less developed economies where people don't have faith in contracts, right? Like, if a deal is done on the basis of a handshake or, you know, trust with a business partner, then, part of the trust building exercise is a lot of these homosocial bonding rituals and hostess bars, and I think that is also kind of more of an Asian way of doing business. But, you know, 'Hustlers' came out in 2008, and maybe it's a Wall Street way of doing business too. That's not unique to Southeast Asia. And, you know, with the Epstein files that are coming out, it very much is an Epstein story, right? Like, it's not just about building trust. It's like how do you create a relationship of mutual hostage? How do you have dirt on a partner? Right? This is like state officials having it with private, you know, business actors and vice versa. And we saw this kind of come out in the Epstein files as well.
And then I became really interested in law and economic sociology. And I I think it started with a smaller question in 'Spiderweb Capitalism,' which is, if U.S. investors are constrained by the Foreign Corrupt Practices Act, how do they compete with Chinese investors, or Middle Eastern investors, or folks from Kazakhstan, who aren't constrained by those same laws? And so initially I went back to look at cultural differences in deal brokering and legal differences of where you're, where you come from. And then I accidentally fell into the story of offshoring. And it was just, to be honest, you know, I did 300 interviews with ultra-high-net-worth and high-net-worth individuals for 'Spiderweb Capitalism.' And the story of offshoring kept coming up, because they kept saying, "Oh, do you know all of our funds are offshore?" And I, initially I thought, "Oh, they just need to get this out of their system." So that I can get into the bigger questions. I was interested in corruption, varieties of corruption, like degrees of corruption. And it wasn't until maybe 76 interviews in that I realized, "Oh my gosh, this is all an offshoring story." So I started in Vietnam and Myanmar, that led me to Hong Kong and Singapore. When I got to Hong Kong and Singapore, that led me to, you know, the British Virgin Islands, Panama, Seychelles, Cayman Islands. So that kind of is the broader trajectory. I guess there's a line that, I think as a sociologist, is always like, "Follow the money." But it's not just follow the money; follow the people who move the money. And that is kind of the through-line across the two projects.
It seems like you're pushing farther in the direction of, you know, moving from wealth or moving from wealth accumulation to how it impacts politics these days and democracy. In your recent work, you emphasize how corruption, you know, which is typically seen as a sign of weakness of institutions and failed governance, but you see it more as a powerful political tool that can be mobilized to create uncertainty and consolidate power, especially for leaders with authoritarian tendencies. Can you say a little bit more and concretize that story with an observation you've had in the context that you observed?
Yeah, you know, so in the view from Southeast Asia and it's interesting when I think about how I switch registers between being in Southeast Asia and being in the United States and the way in which I think of corruption when I'm researching and even writing from there versus when I'm in the states and writing. And we often think of corruption as failure of governance, right? That it's a weak state. Weak states can't govern. And in Southeast Asia and in other parts of East Asia, it has become an instrument for governance, right? It's a way of consolidating political power, weaponizing corruption. What is interesting about that and I I write about that in spiderweb capitalism is that you know this what this means is it's selectively enforced and it you sort of like discipline rivals and everyone kind and reward allies, right? And everyone kind of is trying to figure out who is in power in that moment. who do they have to cozy up to to protect themselves and what's the kind of maneuvering that happens and this is you know every political cycle right particularly in Vietnam and like every 5year cycle and there's always a concern of like who gets targeted and how you sort of anticipate compliance right what is rational in that market is not rational in what we commonly think of as advanced democracies.
You know, and in China and Vietnam in particular you saw hundreds of officials removed or jailed or arrested on charges of corruption. And these kinds of crackdowns of high-profile figures circulate in the media. It's all over. And I remember thinking at the time of doing the research on spiderweb capitalism, like this is not just a story of Southeast Asian countries engaged in corruption. What's really interesting is in recent years under the Trump administration, we've seen charges of corruption and frankly even under the Biden administration, right? Like we've seen charges of corruption being weaponized as a tool, a tool of governance. And if we think of corruption as a tool of governance in authoritarian states and increasingly in democratic countries, what does that mean? It means that we don't we no longer rely on institutions and believe in systems and institutions or law branches of government. It's like people who have executive authority can just go after their rivals.
In your current work, you emphasize the sort of global transnational nature of that spider web cap spider webs and also this influence wielding and you talk about the architecture of global capital and oligarchic governance, global governance, right? Uh global oligarch having enormous power based on their their wealth. That's a daunting prospect for regular folks. And we're seeing that as you said in the in in the American politics as well uh weaponization and politicization of access uh all all of that and pardons. What what do you tell younger younger people who who are worried about this and and try to change that? How do how do we go about making some changes in this global political structure economy?
Yeah. You know, I think about this a lot with my students and I think about how one of the places where my work falls short is I get so invested in understanding the systems and the structures and I don't really have a solution for governance or regulation. And part of it is that a big part of the problem I think is that it's asking regulators to regulate themselves. And in strong states and Singapore is often held up as an example, right? Like in strong states, the state has the capacity to pay its regulators to regulate the economy, right? And put there's checks and balances. And increasingly in even in the United States, I would say many people, you know, Brook Harrington conceived of this concept called brook broligarchy, right? the rise of the tech oligarchs. And the reason why I think that concept has traction is that you kind of see this in the US where you know this kind of massive inequality and the way in which favors are curried for the oligarchs, right? And I think it's really interesting to watch this happen openly and brazenly under both the Biden and Trump administration. Obviously with the Trump administration, it's like, you know, much more in your face and you can see it. But I think of this as a global oligarch. And um, you know, with everything in the in the news, we're eclipsed with this um these blinders of national boundaries, right? And the thing I tried to tell my students is we have to move beyond national boundaries because global oligarchs choose the sovereigns and choose the jurisdictions that govern their financial transactions and activities.
At the University of Chicago where I teach, the vast majority of students are economics majors and most of what they think to do in in in their pragmatic terms is to go work in business, finance, consulting, hedge funds, you know, Wall Street. And fewer people um really see a career pathway in governance or regulation in part because we actually don't pay folks that work in the regulatory, you know, sphere enough in the United States. And I think that's a huge problem in terms of the weakening of institutions even within the states.
You touched on Singapore and it's al often held up as a an example where from what I know the judges right get paid a huge amount of money and that fends off some attempts to corruption and all of that. But is there if not Singapore is there a good example where social system and institutions actually prevent corruption and US was often previously US was seen as oh lobbying is people criticize lobbying as a sort of legalized corruption but you know it was a system and there was some kind of transparency but now it doesn't seem like it's working that well. So are there any examples that we can model after?
I'm now riffing off the top of my head and I think this might be controversial to say, but I think China is an interesting case and example and I guess hear me out. Part of China, you know, and I'm not a China scholar and so it's just it's recent reading that I've been doing. China has a very Palani style of governance, right? It's um there was never this ideology of American free market, right? That the market is free. They always understood that a a strong market has to be held up by the state, right? And supported by the state and that the political and economic sphere in some ways go hand in hand. That doesn't mean that China obviously hasn't weaponized charges of corruption and all of that. But in some ways that consolidation, a kind of very Palanian way of thinking about regulation is interest. an interesting case I think right now of thinking about how you know what would be what is a strong state and what it's complicated because it's authoritarian but on the other hand um yeah I think it's an interesting place to think we often our minds often go to and and part of the corruption the case the cracking down on corruption in Vietnam is very much modeling after China right like how do you consolidate central and centralized power and systems of governance that doesn't mean that everybody else doesn't feel like in a context where there was widespread corruption for a long time and that was part for the course for doing business that now everybody feels vulnerable to arbitrary charges coming up on them. But it's it will be interesting to see where this turn goes in the coming years, right? When we've moved past the year the the burning furnace in Vietnam and the sort of widespread arrests and charges and and the consolidation of power in China.
That's interesting and that's a good place to examine the relationship between corruption and sort of democratic governance because the impression I have of China is that especially uh President Xi's recent efforts anti-corruption efforts is that he used it to consolidate his power centralize everything and that really enhanced um his hold on the country on the government on the Chinese Communist Party. So it was uh typically seen as a good example of how authoritarian leaders can use anti-corruption measures to right to consolidate their power and that relates to your argument about you call democratic reordering if not if not collapse and Asian context is interesting in thinking about it but um so what the what's your reaction to the criticism that uh well so China might be an interesting model of going after corruption but that only consolidate authoritarian power.
Yeah. You know, so I've thought about this a lot and I think in recent times we often think about it as democratic failure within the United States and and part of why I think of it more as democratic reordering is this the institutions remain but the functions of those institutions have transformed right and we've seen this o unfold under over the last couple of years and and part of it is that they increasingly serve the concentrated concentrated elite interests in some ways. If you look at that from that lens, the question is are we really different than China? And is and you know we we hold this up as a democratic society with strong legal institutions, clear rule of law. What's interesting is when if if we look at the reordering within the United States and the rise of the oligarchs within the United States, the difference that I think makes the United States weaker is our political system changes every four years. Maybe in a good year we get eight. But China has a long view. They're playing a 50-year view, right? And that is not just for their domestic economy, it's for the belt road initiative and all of their global ambitions. And so if we're in this cycle, this constant cycle and there is like in the Asian case, we often think of selective enforcement, concentration of political power. In the United States, in many ways, we've delegitimized oversight and political authority as well, right? we've taken and all the way up to the Supreme Court, we've taken many of these checks and balances out. And so, in some ways, I think of it as like we need to have stronger independent institutions that are like not necessarily politically aligned ones because the politics are going to sway. And I and I think about this, you know, with my students, right? We're in a moment right now. The same people that felt the, you know, way under the Obama administration or under the Biden administration felt away then. I feel like we need stronger institutions and organizations, institutions that outlast whoever is in office and maybe that did exist in prior times. Um, but clearly that we're seeing a reordering right now. We see reordering, democratic reordering sort of as a result of overconentration of power and wealth in certain small group of elites and that's happening uh everywhere including everywhere in the world. M um China was ahead of us in doing that.
In in democratic country, let's put China aside. In democratic countries, that leads to apathy and people feeling hopeless about the democratic system.
Yeah. I don't know if I can blame people for feeling that way cuz all kinds of conspiracy theories that are out there, uh some seem ridiculous and they actually turned out to be true. A lot of them. Yes. Uh so in this environment where it's a reality verified reality that too much wealth is concentrated and too much power is concentrated in these small groups of elites and United States used to have more mobility and there's at least sort of entry point to that ladder and and not just in the US but in Europe Europe you it was more class society to begin with. So where's hope for people who live in democracy who are about to give up on democratic accountability?
I mean I think that we also live in um propaganda machine in the United States not just in you know other countries around the world and we live in social media bubbles and sometimes what gives me hope is that there are if you look carefully there are a lot of resistance movements there. I think that there's a growing battle between the millionaires and billionaires, right? And my students disagree with me on this. You know, I think their their Occupy Wall Street was an important movement, but a lot of the resistance is coming from millionaires, right? that don't want to live in a a billionaire oligarchy world who feel who feel economically precarious visav the extreme inequality and feel like anxieties around increasing cost of child care and healthcare um especially those those things and so I am optimistic there is resistance and I I think we just don't highlight it we don't see it but there are I you know there are movements the no kings protest there's been lots of protests people are out using their voice. They're more people are ed educating themselves. I think we need to move away from this polarized system we live in. And and part of it, you know, and this gets into conspiracy theories is a question of like how much do other countries want that polarization because it enables their countries to advance their own interests globally, right? And so I I'm I'm more optimistic in in like that. If you pay attention and you look for resistance movements, you find it. and both mainstream media and social media highlight both extremes and so we don't hear that the middle level discourse too much and I think I agree that that's where that's where hope lies.
Um finally I just wanted this is um um Apoch briefing and a lot of Asian studies people watch that and you're a Southeast Asianist and I think you mentioned during the talk we need to be more forceful in arguing that Asia is on the rise right 10 15 years ago when you were doing your research and now people kind of take that for granted. Can you say how the role of praise of Asia changed in the world in the perception of the American public and how your research trajectory kind of uh was shaped by some of those changes?
Yeah. So um in 2009 and 2010 when I was doing the research it was ethnography it was being in the field on the ground you know I was working in these hostess bars 12 hours a day 7 days a week and I started to witness in micro-transactions the story of Asian ascendancy and western decline and I thought I was crazy right like I thought I'm missing something and so I started to look at the data and I started to look at foreign direct investment inflows from regional parts of Asia versus the west and far more money was it the the numbers lined up to what I was seeing at a micro level and what's interesting is when I presented those findings in the US there was so much resistance and backlash you know people would say oh well you know okay yes the economy is on decline but American still has the strongest military right like we like look at our military and like or you know China is really dependent on the American economy. So if the American economy collaps so will China's right like and actually what's even more interesting is on panels largely by economists not to call them out or you know public policy folks they would invite folks from China and you know Southeast Asia to come to talk about emerging markets versus democratic states and I would just watch these panels where and I I would say like a Vietnamese guerilla warfare style they would play possum and they would say oh you know, we're just we're trying to be like the US. We're trying to advance. And because I'd spent so much time in Southeast Asia in particular, I was just like, they're just playing right into their hand, you know, oh yeah, yeah, we're, you know, we're not rising. We're we're just want to be like you. But the deals that they're doing behind the scenes, the political machinations, the um you know masking statebacked financing as private equity placements to make it look to whitewash it is a gorilla warfare tactic. And I think if you have that view from this history of the Vietnam War, you can see through it. And I think that it was a huge oversight of American arrogance to just believe that that was impossible. Now it's kind of taken for granted and I will never get cited because it's general knowledge now, right? And that's okay too. But um I think there is a what's happened is um it's stoked anxieties right in the American public about China's rise about how advanced China is and about how American steel has been left behind American manufacturing's been left behind a whole economies have been decimated and you know under the Obama administration it was like how can we bring Chinese manufacturing back to the US and you know they had this whole documentary American factory right? And so I think think it's really interesting to think about how that same story has become political point of divide in the country right now and there are some important points about that right like I you know come from Bakersfield California where whole economies have been decimated and I can understand the frustration I mean many of these communities have no industry right like there's not really infrastructure and people feel left out left behind that the the leverage s for mobility are no longer visible or it's hard to see how that's possible.
Fantastic. Great note to end on, and the book is 'Spiderweb Capitalism.' Professor Kimberly Hoang, we look forward to following your work. Thank you for joining us. Thank you. Thank you for having me.