Add one more commodity that China and Russia export for U.S. consumption: Internet stocks.
The emergence of Internet titans like Baidu, Renren and now Yandex is being hailed as a coming-out party for Chinese and Russian entrepreneurialism, but what’s striking about that party is its venue, U.S. stock exchanges.
Why would Renren, the so-called Facebook of China, sell its stock here and not where all of its users are? The answer: investors pay more for growth in the U.S. than elsewhere.
In China, valuations rarely stray far above ten times annual earnings. In the U.S., investors have valued Renren at nearly $5 billion, even though the company lost $64 million last year.
This tells the true story of why America is still the center of the Internet economy, and how tenuous our hold on that position is: even as our technical supremacy is challenged by engineers worldwide, our appetite for risk is much greater.
Culturally, America is still a destination for dreamers, con artists and get-rich-quick schemes. And that’s a big advantage. If we don’t reform education and immigration policy, or provide more funding for higher education, it may be our last one.