Jack Ma: there's too much money flowing to Silicon Valley

The Alibaba founder says the U.S. should spend more money on infrastructure, less on wars

Technology trends and news by Steven Loeb
January 19, 2017
Short URL:

Editor's note: Our Splash Health, Wellness and Wearables event is coming up on March 23 in San Francisco. We'll have Mario Schlosser, Founder & CEO of Oscar Health, Brian Singerman (Partner, Founders Fund), Steve Jurvetson (Draper Fisher Jurvetson), J. Craig Venter (Human Longevity), Lynne Chou (Partner, Kleiner Perkins), Michael Dixon (Sequoia Capital), Patrick Chung (Xfund), Check out the full lineup and register for tickets before they jump! If you’re a healthcare startup and you’re interested in being part of our competition, learn more and register here.

Also, vote for your favorite healthcare startup before February 16! Vote here!

There are a lot of reasons that Donald Trump won the 2016 election, but one of the main issues that I believe drove people to the polls has been the shrinking of the middle class over the last few decades. People that were once thriving are now barely surviving, and they are have become so afraid of what will happen to them that they were willing to roll the dice on a completely unknown quantity, just because he wouldn't be more of the same.

Of course, people will disagree about why the middle class in the United States has been fading. Some will point to globalization and the outsourcing of jobs. Some will point to the tax structure. 

Speaking in Davos, Switzerland at the World Economic Forum this week, Alibaba founder Jack Ma expressed his own views on the subject, denying that the problem has been because of anything China is doing, instead pointing the finger at where the United States places its priorities. Specifically, where the country is spending its money. 

Ma had only good things to say about outsourcing, which he said was "wonderful" and "perfect," because it allowed American companies to make a lot of money. The problem comes afterwards, when those profits are spent by the government. 

"The American multinational companies made millions and millions of dollars from globalization," Ma said. "The past 30 years, IBM, Cisco, Microsoft, they've made tens of millions, the profits they've made are much more than the four Chinese banks put together."

The real question is, though, "where did the money go? This is what I care about. As a business people, I always care about the balance sheet. Where's the coming, where’d the money go?"

The answer: 13 wars fought over the last 30 years. (This number sounded kind of high to me, so I looked it up and he's absolutely right). According to Ma, those wars added up to $14.2 trillion, money that could have been better spent on the American people. 

"What if they spent part of that money on building up the infrastructure? Helping the white collars and blue collars? No matter how strategy good it is, you're supposed to spend money on your own people," said Ma. "We should spend money on people who are not good at schooling."

He also pointed to another shift in priorities, from a focus on companies to a focus on Wall Street. 

"When I was young I heard America is about Ford and Boeing, those big manufacturing companies. The last 10 to 20 years, I heard about is Silicon Valley and Wall Street. The money go to the Wall Street. What happened? Year 2008. The financial crisis wiped out $19.2 trillion U.S.A. alone," he said, along with 34 million jobs around the globe. 

If that money, instead of going to Wall Street, was spent on the infrastructure of the United States, that could have a big impact on the economy. 

"So, it's not that other countries steal jobs from you guys," Ma said. "It is your strategy. You do not distribute the money and things in a proper way."

What Ma is saying is echoing some of what Trump himself also said during the run-up to the election. In regards to all the wars we've been fighting, he said, "we don't win anymore." Trump has also made infrastructure spending one of his top priorities. (I don't agree with Trump about much, but this is something I can definitely get behind)

Ma met with Trump last week and, at the start of the conversation, he discussed that meeting, which he said, "went better than I thought."

He called Trump "open minded" and said he is "happy about the results" of their talk. 

Ma's comments about American spending start at 3:50.