Breaking refrigeration anxiety

The New York Times ruined an otherwise fascinating overview of refrigeration in China by spinning it as an article about climate change ("What Do Chinese Dumplings Have to Do With Global Warming?). Okay, I get how the advent of modern conveniences is increasing China’s use of greenhouse gases, but that’s not what makes it interesting. Here are some interesting facts you may have missed if you file it as just another story about carbon emissions:

• "on average, a Chinese person experiences some kind of digestive upset twice a week”, at least partly due to poor food storage.
• "Nearly half of everything that is grown in China rots before it even reaches the retail market” — refrigerated storage and transportation in this case would greatly help the environment by doubling food production.
• The West has much lower rot-to-market losses, but ultimately we may still throw away just as much food, because we use refrigerators as an excuse to buy more stuff than we can eat — and it ends up rotting at home.
• Refrigeration has many conveniences, but it also drives out the wonderful traditional ways people use for preserving food: salting, fermenting, brining, drying.
• Refrigeration also results in a more homogeneous (and boring) market, because foods can be shipped from farther away without spoiling. Food growers face nationwide competition, driving out many of the local varieties of plants that often form the basis of different regional cuisines.

I think refrigeration in general is overused (which is why I say hold the ice), and I hope China can use the best of refrigeration technology without forgetting the special benefits of traditional food preservation.

Another difference between China and the rest of the world

From Evan Osnos’ new book Age of Ambition, quoting the work of Yingiang Zhang and Tor Eriksson:

They found that in other developing countries, parents' education was the most decisive factor in determining how much a child would earn someday. But in China, the decisive factor was "parental connections”…Writing in 2010, the authors ranked "urban China among the least socially mobile places in the world."

This is another piece of what I previously referred to as China’s under appreciation for “anonymous exchange”, the idea that who  you know is even more important there than in the West.

Technology will fix some of this, as people discover the value of online reputation. Of course, your parents’ connections matter, but would they matter as much as getting a whole pile of five-star reviews from strangers?

 

Chinese cities bigger than Los Angeles

My favorite way to give a sense of the size difference between the US and China is to ask this question: the biggest city in California is the second biggest in the US, with a population of just under 4M people (2012 estimate);  How many cities in China are bigger than Los Angeles?

Rank	City	Province	Population
1	Shanghai	Shanghai	20,217,748
2	Beijing	Beijing	16,446,857
3	Chongqing	Chongqing	11,375,808
4	Shenzhen	Guangdong	10,358,381
5	Guangzhou	Guangdong	9,702,144
6	Tianjin	Tianjin	9,562,255
7	Wuhan	Hubei	7,541,527
8	Dongguan	Guangdong	7,271,322
9	Foshan	Guangdong	6,771,895
10	Chengdu	Sichuan	6,316,922
11	Nanjing	Jiangsu	6,238,186
12	Shenyang	Liaoning	5,718,232
13	Xi'an	Shaanxi	5,206,253
14	Hangzhou	Zhejiang	5,162,093
15	Harbin	Heilongjiang	4,933,054
16	Suzhou	Jiangsu	4,083,923
17	Qingdao	Shandong	3,990,942
18	Dalian	Liaoning	3,902,467

Bonus question: how many of the above cities – all of which are bigger than LA -- have you ever even heard of?

Incidentally, India (the world’s second-largest country) has only 10 cities bigger than LA.

[book] How Asia Works by Joe Studwell

Long-time journalist Joe Studwell (The Economist, Far East Economic Review, etc.) and now "mid-career PhD at Cambridge University” (what I’d love to do!) has thought about Asia for decades and concluded that three “interventions” are behind the successful Asian economies:

1. First, maximize output from agriculture
2. Next, direct all investment and entrepreneurs toward manufacturing
3. Meanwhile, tame the financial sector to focus capital on intensive small-scale agriculture and on manufacturing development

Using examples from Japan, Korea, Taiwan to prove his point, and counter-examples from Thailand, the Philippines, and Malaysia, he shows in detail how government policies built on land reform helped struggling poor countries develop economies built on full employment through agriculture and the “garden-level” productivity that comes when people do everything by hand, without machines.  Countries without land equality couldn’t breed the light manufacturing that comes from the demand created by farmland product surpluses.

With rising surpluses from agriculture, successful governments targeted industry, but with an important caveat: only if the products were competitive internationally. This way, even if your officials are corrupt (inevitable), their money has to come from success in other countries. Selling natural resources breeds corruption because the gains all go to whoever controls the resources; in export-based manufacturing, corruption is useless unless a developed economy buys your stuff.

All the while, successful economies tame the banks to ensure their interests are aligned with both agriculture and industry.

One interesting aside that got my attention is how little education matters:

• 55% of Taiwanese were illiterate at the end of WW2 and 45% remained in 1960.
• S Korea literacy in 1960 was lower than 2010 Ethiopia
• Meanwhile, Philippines has the highest university-educated students in SE Asia and places like Cuba have some of the highest literacy and university engineering grads in the world.

So far so good, and I liked his overall analysis.

But generally I found him overusing the term “market failure” and underusing the equivalent danger “government failure” (aka public choice). Like the similar analysis I didn’t like from Martin Jacques, I have the following thoughts:

• His argument would be more persuasive if he analyzed all countries that apply his formula. He touches on India, but what about Africa, southern and eastern Europe, South America, etc.? (Note that he deliberately excuses Singapore and Hong Kong from his analysis because they don’t fit his thesis).
• Culture plays a role, perhaps the biggest role. Japanese or Koreans would have been successful under a lot of different development models. They are driven people, with a deep level of pragmatism that you can’t ignore. There is a contrast between these people and other cultures. There just is.
• State-directed capitalism, of the form this author likes (i.e. “not driven by free market ideology”), may be good at helping your country win in a basic industry (steel or cars). You know the road map, you know how to measure success.
• Japan, the example I know best, has plenty of successes that were not driven by the state. Honda and Sony are the classic brands that thrived in spite of government inattention.
• Predictability and stability are good attributes for the state, and here again Korea and Japan and Taiwan have some advantages. Governments can change, but the overall sense of drive is hard to kick out (it’s that culture again)

I have much more to say about this (check out this review by John Williamson, the man who coined the term “Washington Consensus” that Studwell pans) but overall I thought the book was well-written but with much to dispute.

 

The argument for regulating information

When Nobel Peace prizewinner Liu Xiaobo was imprisoned by Chinese authorities, his captors were unafraid that he alone, a single individual without guns, an army, or even military training, threatens the Chinese government, which has plenty of those items to spare. And few in the government would argue that Liu himself, or his ideas, are themselves irresponsible. He’s a well-educated, perfectly sensible individual well within his rights to think the thoughts he was thinking. No harm if he had simply stopped there.

When you or I, dear reader — the educated elite users of a product like the genetic testing service from 23andme, when we use the information about our genes, few at the FDA will argue that there is a danger. After all, we’re the early adopters, the people smart enough to seek this information in the first place. The trouble is not you and me, it’s them, don’t you know, the unwashed masses out there who may become — how shall we say this delicately? — overexcited, causing themselves potentially tragic — and avoidable — harm.

History shows that the ideas Liu outlined in Charter 08, might actually help China. Reasonable people, those bearing the full responsibility for the stability and long-term future of the country, have no fear of the ideas themselves. Once the country has matured a bit more, once the people are ready for this information, then yes, it may become appropriate to discuss the issues publicly. But right now, here in the real world, where leaders with actual accountability for China’s long-term stability, know that to throw Liu’s ideas out there, wily-nilly, without the proper preparation…well, think of what could happen if those ideas landed in the hands of the irresponsible masses who might be tempted to take action without understanding, as we do, the full consequences.

You see, an expert, whether at the FDA or in the Chinese Communist Party, has been carefully vetted, with years and years of education that brings a better sensitivity to the long-term benefits, as well as the potential downsides, that come with access to powerful ideas.

The government has been very patient with Liu Xiaobo, offering years of warnings, giving him plenty of time to realize the potentially destabilizing consequences of his behavior. The FDA was similarly patient with 23andme, spelling out over dozens of meetings and countless emails, precisely what the experts fear — know — can happen when important information gets into the wrong hands.

Liu Xiaobo has no gun, but many of his potential readers do. 23andme doesn’t perform mastectomies or administer drugs, but many of their potential readers may not be so limited.

You and I may be able to handle a world without sensible regulation of ideas and information. But do you really think that others can?

[book] Wealth and Power

I read this because, with all the recommendations I'd received, well, I had to. When I first moved to China and was looking to start reading up about the place, I followed the advice of David Moser on an early Sinica Podcast to "read anything by Orville Schell". When none other than Sinica host Kaiser Kuo mentioned that Schell had a new book coming in June 2013, I immediately put it into my reading queue and this week I finished it.

A nice overview of key people in China's past two hundred years, the book has chapters with the usual suspects like Mao, Chiang Kai Shek, and the Qing Empress Dowager Cixi, but you really should read it for its descriptions of less well-known (to the West) people like Wei Yuan (the guy who during the Opium Wars first worried about China's "humiliation"), Liang Qichao (the scholar/journalist whose New Citizen journal influenced everyone remaking China in the early 20th Century), Chen Duxiu (energetic founder of the CCP, who introduced Mao to communism but was later ostracized) and dissidents like Liu Xiaobo (winner of the 2010 Nobel Peace Prize).

After reading the devastating Jung/Halliday book Mao: The Unknown Story, I found Schell's relatively mainstream depiction of both Mao and Chiang Kai Shek to be bland. Unless you're not already familiar with Edgar Snow's cheerful picture of Mao as heroic fighter against Nationalist corruption, you can skip those chapters. I'm being dramatic, of course -- anyone whose byline is on the Tiananmen Papers is no lackey for the CCP -- but to a curious, outside observer like me, deep skepticism is justified about everything people assume is true about Mao, and this book largely repaints the standard picture in ways that ensure the authors won't have their China visas revoked.

The last chapters, with its late-breaking history of China between 1989 and Liu Xiaobo were the most interesting to me. China, having lately received the wealth and power it has been lacking for the past two hundred years, may have found in the CCP a powerful new form of adaptable government, one that is intensely pragmatic in ways that seamlessly replace the capriciousness of revolutionary Mao with the flexibility required to steer a huge country into modernity: "resilient authoritarianism", as Columbia professor Andrew Nathan calls it.

Another final anecdote I liked in the book quotes famous sinologist Douglas Fairbanks lecturing a student who wants to compare China too much to the West: "Mao didn't make the Chinese Communist revolution for you", he says. China is on its own timetable, and the interesting characters portrayed in Wealth and Power are reminders that you can't understand the future unless you understand what's happening in China.

 

 

A Bite of China

After months of recommendations, I finally watched my first episode of the CCTV documentary A Bite of China (舌尖上的中国) and I was not disappointed. It’s a well-produced, professionally filmed tour of Chinese food.  There are seven one-hour episodes, each going into rich detail about various aspects of the cuisine from harvest to table.

One of the first things a serious China visitor learns is the incredible diversity of Chinese cuisine, with in reality bears no resemblance to the “sweet and sour pork” dishes you’ll find in most restaurants in America. This documentary isn’t a substitute for actually trying the wonderful flavors, but it’s a must-see for any foodie.

All episodes are now available dubbed in English, viewable free in HDTV. My favorite segment from  Episode 1: “Gifts From Nature” was the discussion of salt-cured Nuodeng ham from Dali.[start at the 18:00 mark]. The special salt used, high in potassium, has been harvested there for more than a thousand years and results in a rich flavor that puts Jamón ibérico to shame.

You can watch the whole series on Youtube, but you might have a better experience streaming directly from CCTV (in English) site.  Chowhound publishes links to all the English stream locations, and there's even a Wikipedia entry with more references and links.

Highly recommended.

The Great Firewall really censors trade

My favorite weekly China-related podcast, Sinica, answered one of my questions on their latest episode, "Revenge of the Call-in Show".  Hosts Kaiser Kuo and Jeremy Goldkorn, who are far more knowledgeable about China than I’ll ever be, conclude that the Great Firewall is first and foremost about censorship (or more precisely, social stability), and the fact  that it helps Chinese internet companies is a happy bonus, but not the goal itself.  Kaiser adds that non-Chinese competitors fail, even without the GFW, because they are usually late and poor competitors.  YouTube, he notes, was a distant runner up for video service, and Twitter/Facebook were plagued by poor performance relative to domestic competitors long before they were blocked.

But wait a minute...would Facebook, which is no government-resisting anarchist, really hesitate to give the Chinese authorities access to their servers if that’s what it took for admission to the world’s biggest market?  That’s why I’m not convinced this is just about censorship.

Facebook and YouTube and many others were once themselves behind the market leaders in other countries, including the US (MySpace, Friendster) when they started. They suffered the same poor performance and incumbency problems in Japan (hardly a place devoid of domestic competitors) and many other places but won anyway.

Countries rarely enact trade barriers explicitly “to prevent trade”. The Japanese bureaucrats who restricted US imports for so long had no shortage of good non-trade-related reasons:  Japanese stomachs are smaller, and they wouldn't digest well the larger Florida oranges; Japanese snow, which falls on an island, is different and might present a safety hazard for skis designed for continental precipitation like Europe or America.  Even in the US, small family farms are prevented from selling their goods to willing and educated buyers for "food safety reasons", not because the large politically-powerful agribusinesses don't want the competition (that's just a bonus).

Kaiser and Jeremy are right about the explicit goals for the Great Firewall (“promote domestic harmony”), but policymakers might be better off thinking about it instead as a trade issue and not a human rights one. China can argue that, as a sovereign nation, it should be allowed to control information within its borders, but blocking foreign competitors for purely anti-competitive reasons runs afoul of the spirit of the international trade organizations of which China is a part -- and big beneficiary.  That argument, it seems to me, is more likely to win in the end.

[Book] Restless Empire by Odd Arne Westad

This is one of the best books I've read about China in a while. It helped me think about China’s modernization as a long, still unfinished process of slowly-increasing engagement with Westerners like me. At some point I’ll write up my thoughts and opinions generally, but meanwhile since iBook makes it easy for me to dump direct quotes that I underlined while reading, I’ll leave the following excerpts.  .

Chapter 1: Empire

• This pervasiveness of the state was closely linked to dreams of expansion. Qianlong believed that Qing rule was in form universal, in the sense that its principles should be applied by all peoples who were culturally advanced enough to appreciate and use them.

Chapter 1: Metamorphosis

• The Protestant religious awakenings in Britain and the United States in the 1820s and 1830s, combined with the increase in trade, meant that many Christian missionaries were able to operate on the edges of the empire. The first complete Bible in Chinese was published in British India in 1822, and other versions appeared over the next thirty years.

Chapter 2: Imperialisms

• Its control of the key bases and depots for the developing trade—Singapore, Hong Kong, and to a large extent Shanghai—anchored its primacy. But while the British controlled the structure, the Chinese supplied the infrastructure—the depots for East Asian trade were all Chinese cities, run as much by Chinese networks as by British authorities.
• Few societies have ever put more emphasis on the value of education in its various forms than did Qing China. Basic literacy rates were reasonably high compared to the rest of the world. Between a third and a half of men and up to ten percent of women could read. There were many schools in major cities, but competition for entry was fierce.
• Building on the knowledge transmitted by pioneers who had left earlier—people like Rong Hong (known in the West as Yung Wing), who had graduated from Yale in 1854 as the first Chinese with a US college degree—both the government and individual families began sending young people to America and Europe, and, as we shall see, a bit later also to Japan.
• “The English and the Americans are closely related, they have much in common, but they also differ widely, and in nothing is the difference more conspicuous than in their conduct,” observed Wu Tingfang, one of China’s first ambassadors to Washington. The democratic politics in the United States puzzled those who came: How could there be, many asked, collective decision making on administrative matters, when there was such extreme individualism in economic matters?

Chapter 5: Foreigners

• The numbers of foreigners in China varied year by year according to conditions in the country and internationally, but it is likely that the average in the first half of the twentieth century was between 300,000 and half a million (maybe surprisingly, the figures in 2005 were about the same). Of these, about half were Japanese subjects; the British, who long were the most influential, were never more than 15,000.
• The Salt Administration, which collected the salt tax that the state levied on both producers and importers, in the 1920s provided close to twenty percent of the state income.

Chapter 6: Abroad

• 9,000 Chinese wives went with their American husbands back to the United States after World War II. A number had married at a time when US immigration laws still forbade them from ever living in their husband’s country.
  [World War I was] by far the biggest and most concentrated mass transport of Chinese workers ever to go to another continent. It would have major consequences in terms of spreading information about Europe into even the remotest parts of China.
• The US government banned Chinese immigration in 1882. It is the only restriction Congress has ever enacted directed against all citizens of a specific country. The ban lasted up to 1943.
• Kim Il-sung, who after 1945 became the leader of North Korea, had an even closer relationship with China. Born in 1912, he grew up in a Christian Korean family in Manchuria and studied in Jilin City, where he started his activities against the Japanese occupation of Korea.
• [M]ore than 350 million people of European origin live outside Europe today, while only 40 million people of Chinese descent live outside China. Of the 3.5 million Chinese living [in the United States and Canada] two-thirds were born abroad.
• More than half of those over twenty-five have earned a college degree (as against a quarter of the general population), and they have a higher-than-average family income.
• By the 2000s, Singapore, with 77 percent of its population ethnically Chinese, was rated top on the free-market index alongside Hong Kong, even though the government continues to control around 60 percent of the total GDP.

Chapter 7: War

• In this second Sino-Japanese war, begun in 1937, two very different images of China came into conflict. One, held by most Japanese, came out of the nineteenth century and saw China as less a state than a geographic region with different power holders: Rival governments, local strongmen, and foreign representatives combined in different ways to keep some semblance of order, while advanced powers, such as Japan, promoted development within China. It was the advent of a nationalist central government, in the form of the Guomindang, with the stated purpose of resisting Japanese policies, that imperiled the image of a quiescent, pragmatic Chinese approach to international affairs.
• The war [with Japan] made it possible for the party to mobilize in its new bases in the northwest and behind the overextended Japanese lines, where the GMD state had collapsed. When the war began, the CCP was a small group, but in 1945—with 1.2 million members and 900,000 men and women under arms—it was a force to be reckoned with. Even more important than its numerical expansion, though, was the ability the party had gained to work with all segments of Chinese society through a system of centralized decision making. The war had made it possible for Mao Zedong and the group who had promoted his leadership to achieve two very different goals at the same time: Make all party members obey a secret and cloistered Mao-centered inner organization but present a moderate and cooperative outward image.
  Japan lost 400,000 men fighting in China (and 1,500,000 more in the other wars that the war in China started). China lost at least two million men in battle, and twelve million Chinese civilians died as a direct result of warfare.

Chapter 8: Communism

• But the detailed understanding of capitalist modernity that Marx had attempted was not at the center of Chinese Communism. Das Kapital, Marx’s main work, had not been fully translated into Chinese before the outbreak of the Sino-Japanese War in 1937.1 While the United States gave the GMD government more than $1.9 billion in assistance between 1945 and 1950, equaling more than $40 billion in today’s money, it could neither control its policies nor determine China’s political trajectory.

Chapter 9: China's Asia

• Koreans feel a cultural and historical closeness with China. In opinion polls in South Korea in 2005, China was ranked equally with the United States—South Korea’s long-term ally—as a country South Koreans viewed favorably. Among those under forty, China had a clear lead in terms of being seen as friendly In the 1980s seventy percent of all Japanese felt an affinity to China, far more than for any other nation.
• [China] for the first time since the fifteenth century [has] a blue-water navy, with fifty submarines (ten nuclear) and seventy major warships.

Comparing China and 70’s high-growth Japan

Interesting chart via Financial Times Alphaville from a presentation by C.H. Kwan at Nomura's Institute of Capital Markets Research:

The right-hand column (ICOR – incremental capital output ratio) shows how extremely unproductive China’s capital is compared to Japan, South Korea and Taiwan during their transformational expansions. And that Chinese capital productivity has actually worsened in recent years:

It's hard to look at the Chinese government's approach to development and wonder how that can be a sustainable way to grow. When 48% of the economy is capital investment, much (most) by centralized, all-powerful bureaucrats, the word "bubble" seems too bland to describe the inevitable crash.

LINE and more Facebook/Twitter Asian Competition

Before you start to think Facebook will take over the world, look again at new competitors emerging in Asia, including this one originally from Japan and now boasting more than 100 million users.

LINE has everything you'd want in a mobile app: free text and voice (and probably soon, video), cross-platform versions (iPhone/Android/WinPhone, Mac/PC), and plenty of cool features like a way to sign in to your desktop using your phone (perfect for situations, like at an internet cafe, where you don't want to risk typing your password into a key logger).

Think of it like a cross-platform version of iMessage, or Path, or even Skype. There are numerous in-app purchases, including "stickers" that are apparently must-have for serious users. 

The competition, internationally, for mobile and social apps is just unbelievable, and don't expect it to lighten up any time soon.

Feel free to add my to your contacts:  my username is 'sprague'.

Decentralization in the ancient world

The Terra Cotta warriors of ancient Xi’an are an impressive legacy of the early centuries BC, and they better be: during that period, something like 10% of the Chinese population was involved in Big Government-sponsored construction projects, including those tombs for the Qin Shi Huang, the first Emperor of China. The Great Wall, the Grand Canal, and many others are distinguished high points of Chinese civilization, and all of them were built by a powerful central non-elected government.

The Chinese legacy puts to shame the comparatively modest monuments that sprang from the market-based democratic economy of Ancient Greece. From the long viewpoint of history, this seems to show the advantages of powerful centralized governments.  A thousand years from now, nobody will remember the achievements of our greatest corporations, but who will forget the government-sponsored Apollo moon landing (or today’s Mars Curiosity probe)?

Or will they?  That’s why I thought this Econtalk podcast interview with Josiah Ober was interesting, because it shows that in fact Ancient Greece was a thriving, economically successful place that in general was almost certainly far wealthier than anything in China at the time. The legacy they left behind, while not visible like the monuments of the Qin Dynasty, is far more influential today.

From Ober’s Princeton/Stanford Working Paper, Wealthy Hellas.

Here are three reasons to believe that, compared to other ancient societies, Hellas was wealthy:

· Premise 1. The Greek economy grew steeply and steadily from 800-300 BC, both (a) in its aggregate size and (b) in per capita consumption. 

· Premise 2. By the fourth century BC Greece was (a) densely populated and (b) remarkably urbanized, yet (c) living standards remained high. 

· Premise 3. Wealth was distributed relatively equitably across Greek populations; there was a substantial “middling” class of persons who lived well above bare substance, yet below the level of elite consumption.

A few more claims:

• 30% of Greeks lived in cities with populations greater than 5000 (versus only 10-12% of the later Romans)
• 25-35% of the population lived on imported grain (evidence they were producing important trade goods)
• The Gini index of 0.7 corresponds favorably to 1472 Florence (0.788) or 1998 USA (0.79)

Many other fascinating thoughts throughout.

(Almost) leaving China

Bubbles are fun! I lived in Tokyo for most of the late-80s and early-90s, Silicon Valley during the dot-com days, Seattle during the real estate peak of the 2000s, and for the past three years, my family and I have been living here in Beijing. For somebody whose first eighteen years were spent in Wisconsin farm country, I feel lucky to have had a front row seat watching the froth around me expand and expand and expand, until, well, until…

It’s recently been fashionable for departing expats to write about why, finally, they are giving up on China. Environmental issues (bad air, unsafe food), education, uneasiness about the political situation: there are many reasons for concern, all of them perfectly justifiable and in varying degrees applicable to anyone who lives here, including me. My situation is different because, although I first moved to Asia thirty years ago, I’ve only lived in China since 2009 – I am no “China expert” – and perhaps as a result of my shorter tenure, I’m still far too ignorant to “give up” on the place. When you’ve been through several bubbles, you see problems as just the inevitable growing pains that go along with life on the front lines of the future. China, I’m sure, will be fine.

Truth is, I enjoy China a lot, and intend to stay focused here, even after this month when I move back to our home on Mercer Island. There are still too many opportunities, and too many things I like:

People: I find the Chinese generally to be incredibly and refreshingly hard-working, long-suffering, and pragmatic about work and life in a way that I don’t always see in America anymore. My work colleagues are among the best I’ve ever known.

Vastness: An overwhelming population, of course, but also a huge land area, hundreds of major urban areas whose names you don’t even know, at least eight different cuisines, countless dialects and minority subgroups – China is impossible to describe without superlatives.

Inevitability: you can’t study China (and world) history and culture without recognizing how central the Chinese are to the entire human race, and will be even more important no matter what happens next.

Most of my friends and colleagues already know that this was the right time for me and my family to return to the US for a few years, but as you’ll see if you continue to follow me on Twitter and elsewhere, I’m not really leaving. Bubble or not, China will be a big part of the future for all of us.

Asymco's Dediu in China

Horace Dediu's asymco.com (Twitter: @asymco) is one of the best mobility analysis sites out there, so I was excited about his recent trip to China, hoping that he'd have some special insights in his Critical Path podcast with Dan Benjamin.

Alas, apparently he was only here for five days, and it was a vacation with friends, so his observations were purely as a tourist, though of course a smart guy like him can't help but notice interesting things.

He visited a PC Mall and bought some cheap cables. He was frustrated to find that Twitter/FB don't work here.  To him, China is the familiar case of a developing country that follows the Japan/Korea model of Asian development, converting "peasants into factory workers" for a straightforward boost to GDP that will bring them a long way but won't necessarily translate into an innovation powerhouse.

Most of all, he saw lots of smog, as you can see in this photo he took in Shanghai:

He points out that soon China will be Apple's biggest market, but he didn't dwell on the possible consequences and instead devoted most of the podcast to his take on how this year's WWDC shows Apple is becoming more friendly to an ecosystem of partners.  

Bottom line: worthwhile podcast if you want to hear more about Apple and the mobile industry, but not much insight about China.

By the way, I was intrigued to hear that, like me, he gave up regularly reading the Economist some time ago. Though filled with great writing, their perspective puts too much faith in macroeconomics which I think perceptive readers after a while lose confidence in its explanatory power. I mean, they provide an interesting well-written narrative to explain what happened, but I just haven't seen many cases where that macroeconomic viewpoint helps you see the future. 

Mike Daisey and the fight to keep people in crummy jobs

I listened to the riveting This American Life podcast retracting its January episode "The Agony and Ecstasy of Steve Jobs", featuring the dramatist Mike Daisey, who misrepresented himself lied about the conditions under which your iPhone and iPad are produced.

For the record, I was always skeptical of media claims about worker exploitation in Apple factories. But that’s no great insight; I'm skeptical generally of the media, especially when I know a little something about the subject. Still, the discussion about journalism versus theatre shouldn’t distract us from the final question that producer Ira Glass asks in the episode:  as somebody who owns these products, should I feel bad?

From the transcript, here's the reply from a reporter whose own article has fueled the flames that Daisey started:

Charles Duhigg: So it's not my job to tell you whether you should feel bad or not, right? I'm a reporter for the New York Times, my job is to find facts and essentially let you make a decision on your own. Let me, let me pose the argument that people have posed to me about why you should feel bad, and you can make of it what you will. And that argument is there were times in this nation when we had harsh working conditions as part of our economic development. We decided as a nation that that was unacceptable. We passed laws in order to prevent those harsh working conditions from ever being inflicted on American workers again. And what has happened today is that rather than exporting that standard of life, which is within our capacity to do, we have exported harsh working conditions to another nation.

It’s easy for me, sitting here with my latte in my comfortable urban apartment, to pontificate about “the rights of workers” as I head off to my cushy high-tech management job. But I don't like one part of Duhigg’s argument: who’s the  "we" that decided certain working conditions are "harsh" and others are acceptable?

Laws didn’t end harsh working conditions; people did. Like many in high tech (or for that matter, Duhigg or Daisey), I often work 60+ hours per week. My company “forces” me to endure weeks of painful travel, separated from my family. Do you feel bad for me? No: because I know the risks, I know the alternatives, and all-up, I enjoy what I’m doing. I see it as a step toward something better for me and my children.

America’s employment laws did nothing to protect me (or you) from the harsh working conditions of the past. My life today is better precisely because of that awful labor of my ancestors, who saw it as one step in an opportunity to build a better life for their family.  Rather than fight for laws to ensure their children could have a crummy (but safe!) job in a factory, they fought to ensure their kids never ended up in a factory at all.

Why assume that we latte-drinkers are more capable of deciding tradeoffs than the thousands of unskilled laborers who line up every day begging for a job at Foxconn?  When "we as a nation" made unskilled jobs  impossible to justify in America, we didn't count the votes of those whose alternative to a factory job was much worse.

Of course, the twists of fate can be cruel and there are Bad People who will exploit the powerless.  Labor laws are one tool that can bring immediate relief.  But it’s too easy to focus only on those who directly benefit -- the existing workers, who of course are grateful -- and lose sight of those who now have no opportunity at all. By forbidding, for all time, Americans to work at jobs that are no more worse than what my grandparents endured, many of today’s unskilled workers have been shut out of the labor market, their opportunities “exported” to places where there are fewer restrictions on how unskilled people can earn money.

Higher wages won't solve the problem. Many kind-hearted people will notice that labor is a small fraction of the cost of an iPad and suggest that Apple “do the right thing” and pay the workers more. That sounds like an easy solution, but it carries its own tradeoffs.

An above-market wage makes it harder for workers to bounce through the industry. Workers who thought of this job as a stepping stone to something better may find now that it already is better. If this unskilled job pays like a skilled job, why bother with further education? For that matter, why encourage your younger cousins to make an investment in school if they can do just as well (maybe better) at the factory.

Note that above-market wages don’t just trap you in a dead-end industry; they give more power to your current employer. Sure, a tough employee or industry union would shift the power temporarily, but eventually Foxconn will notice that it can do the same work elsewhere for less money. Or worse, your higher-than-market wage might be in a company that, through no fault of yours, is not keeping up with the industry and has to lay you off.

I'm not saying that people shouldn't be paid well, especially if the work is hard. But it's impossible to know the "ethical" price for labor when you take into account all the hidden costs, including the missed opportunities for people who are trapped in jobs paying more than they're worth. Isn't it better to let people decide for themselves?

You can’t exploit robots. Ultimately, those of us who want to end harsh factory labor are on the right side of history because whether Foxconn’s labor standards meet your personal definition of “humane” or not, those jobs will eventually disappear. In fact, people like Mike Daisey are accelerating the pace at which it becomes cost effective to replace unskilled people with machines because the tiny amount of labor remaining in the assembly line isn’t worth the bad publicity.

Let’s hope the workers today can rack up enough 60-hr-week overtime put away enough savings before that happens.

Back to Ira's question: should we feel bad about how the iPad is produced?

This is where my experience in the industry leaves me bristling at the moral arrogance of those who imply Mike Daisey is “the voice of our conscience”, or conversely, that there are some evil Apple managers out there who “look the other way” at despicable behavior. If you've been to a factory, or worked with a high tech manager who does, you know: we all care. Fear not, armchair urban TV watchers: your sense of justice is no higher than those who are actually working and managing the business. If somebody like Daisey makes them seem evil to you, listen with healthy skepticism.  We high-tech managers are humans too; we don't exploit people for fun or profit -- and it's presumptuous of you to think so unless you meet us.

If you truly want to help the people who make your iPad, don't forget the ultimate goal is not menial factory jobs, however well-paid or protected. Our ultimate goal, like those of these Foxconn factory workers, or my grandparents -- should be to find something better for themselves and their families.  Anything that takes away from that goal is not a fair trade.

 

The Fat Years [Book]

 

China deserves to be number one. That's an unstated premise of this book, which is all the rage among intellectuals and others interested in what the world of the near future would be like if China were back in the top spot it enjoyed for thousands of years. But revealingly, it gets there by cheating--exploiting a failure of the West, and using the powers of a dictatorship to fill a world power vacuum.

It's a wonderful read, with interesting characters from a cross-section of modern China. The book is banned in the mainland, making it all the more fun, especially to Chinese readers.  But I think it misinterprets the reasons for the rise of the West, or more precisely it relies on an incorrect reading of the reasons China fell behind.

The Chinese political leader in the book who at the end gives an explanation for China's success describes a series of well-executed moves that are possible only in a dictatorship. The novel asks if it was worth it: would you rather live in a good hell (poverty and submissive status but full knowledge of your situation) or a fake paradise (prosperity based on ignorance )

Most discussions of the book focus on how China as Number One has lost its soul, and how economic prosperity has come at the terrible price of amnesia about how it arrived. That's part of it, and clearly that's what interests the author. But that stream of thought reveals, I think, a blind spot in the way Chinese intellectuals see themselves in the world.

The West rose -- broke away from the status quo that made Chinese rulers comfortable --  from a lack of leadership, not thanks to any wisdom on the part of benevolent dictators. Prosperity requires creative destruction, including the sorts of regular takedowns of status quo that the West knows all too well, from the European wars of religion, to the American Revolution, to the regular rise and fall of Silicon Valley high tech giants:  the West is constantly throwing out the incumbents, passing power from one center to another, never giving enough power to allow any single person or group to dominate for long. The Checks and Balances of the American Constitution -- the awful brakes on power that sometimes seem so frustrating to people who want "progress" --  are the Enlightenment wisdom that forces today's leaders to show a humility that's never been necessary in China.

The chaos that Chinese people seem to fear isn't the "hell" -- good or bad -- that is the unspoken anxiety in this novel. In fact it's a necessary precondition for the paradise that many of them are seeking.

p.s. I went to a talk by the author, Chan Koonchung ((陈冠中)  last Fall.

What little we know about China

An observer from Outer Space might raise eyebrows at the apparently irrational way that Americans pick their Presidents, but at least the process itself is transparent.

Does China have a similarly-irrational way to pick its leaders? Who knows? That inscrutability is at the heart of why an otherwise esteemed publication like The Economist can, over its 170-year history, make so many mistakes in its reporting.

Given the size and importance of China, it’s surprising that even long-time watchers from the West have such a poor track record guessing what will happen.  On the surface, power transitions appear to be methodical, even boring affairs (in stark contrast to the Wild West of American national elections). But the recent case of the runaway police chief Wang Lijun and its affect on the political career of the emerging national figure Bo Xilai is a hint that China may do things more randomly than we think.

This was my takeaway from the panel discussion held this weekend at the Bookworm Literary Festival, held at Beijing’s premier foreign bookstore.  Three writers from the newly-created Economist dedicated section on China, Gady Epstein, James Miles, and Ted Plafker.

Who are the media censors of China? There must be literally thousands of well-trained professionals, skilled enough at English and savvy enough politically to pour through every magazine article to search for information that must be thrown into the memory hole.

But maybe the U.S. equivalent is the army of lobbyists who have no apparent function other than to steer lawmaking in the direction of somebody who is paying for it. There are thousands of people in Washington working full-time on behalf of various industry or other groups in order to change the way that laws are written and enforced. From the point of view of that space alien, is there much difference? In both cases, you have a bunch of people dedicated to influencing politics.

Another takeaway was the realization that nationalism in China isn't homogeneous. Chinese history is rich with stories of one village betrayed by leaders of another, with descendants now forced to learn a version of the past that denies their own memories. These losers of history see themselves as fiercely loyal Chinese -- perhaps the true Chinese-- with a nationalist pride that is especially poignant because they still feel exploited by outsiders. There are Christian communities, for example, hundreds of years old who see the current PRC era as a continuation of "the century of humiliation" that mainstream Chinese think has ended.

Lots to think about, and a reminder that although I've been in this country for three years, I really know so little.

[Book] 1493

 

The New World was created, not discovered, says Charles C. Mann. The impact of Columbus’ historic trip was felt worldwide, ushering in the Age of Globalization that we know today. Nearly everything, worldwide, changed so much as to make the pre-Columbian world unrecognizable. Can you imagine Italy without tomato sauce? Ireland without potatoes? Georgia without peaches?

I was surprised to see that this book is as much about China as it is about America or Europe. In fact, the author did much of his research in China. This is more obvious than it seems: after all, trade with China was the ultimate goal of Columbus and the generations that followed him.

There is a lot to this book and I know I’ll think about it for many years to come. If I had more time or motivation, I’d write a proper summary, but in these days of super-short tweets and instant-access Google, let me just summarize a few of the more interesting takeaways, since I know I’ll likely want to refer back to these ideas later:

• Columbus’ largest ship, Santa Maria, ran aground on his first voyage, so he had to leave 38 people behind. When he returned eleven months later, they were all dead—the result of conflict with the locals (called Taino).
• The non-human travelers to America were at least as important as the explorers themselves: bacteria and viruses caused epidemics, insects destroyed native crops.
• Earthworms were unknown in America until the Europeans arrived. Imagine the soil without them, and all the consequences on mulch and the types of trees possible and much, much more.
• Trade with China began in the 1560s in Manila.
• The period of unusual cold known as the Little Ice Age, from 1550 to 1750, may have been caused by the end of wide scale forest burning by native Americans.
• The Virginia joint-stock corporation shipped seven thousand people to Virginia between 1607 and 1624, of whom eight out of ten died.
• Tobacco saved England’s New World investments: by 1680 it was exporting 25 million pounds per year.
• Nicotine addiction was rampant worldwide by the early 1600s: in 1635 the khan Hongtaiji prohibited tobacco. Guangxi Chinese were making tobacco pipes by 1549.
• The flintlock rifle, which first became available in the late 1600s, was the first weapon that Indians recognized as superior to the bow. John Smith’s matchlocks didn’t work in wet conditions and required a tripod for accuracy.
• Malaria killed untold numbers of people in the Americas and was common even in New England. Africans, with their “Duffy antigens” were immune and became ideal laborers as a result.
• One reason Zheng He’s historic travels from China weren’t followed up: he never encountered a nation richer than his own. “For the same reason the United States stopped sending men to the moon – there was nothing there to justify the costs of such voyages”.
• The Ming prohibited all private seagoing vessels in 1525 (but reversed the order fifty years later in order to trade with Europeans in Manila).
• Wokou (倭寇) Japanese pirates were a serious threat to trade.
• Yuegang, near modern Xiamen, was one of the world’s most important ports in the 1600s.
• By the 1570s, 90% of Beijing’s tax revenue came in the form of silver coins.
• Potosi, Bolivia’s “mountain of silver” was discovered in 1545. By 1611, its population of 160K was as big as London or Amsterdam.
• The Qing dynasty enacted a program of smallpox inoculation.
• “Part of the reason China is the most populous nation is the Columbian exchange” (p177). New, highly productive crops like sweet potato and corn enabled cultivation in otherwise impossible areas.
• For 167 days in 1925 two Polish researchers lived on potatoes with butter and reported no health problems. [p197]
• “Roughly 40 percent of the irish ate no solid food other than potatoes”. [p209]
• Tenochtitlan fell on August 13, 1521.
• P.312 : 57% of the early descendants of Conquistadores tracked were of Indian descent.
• P.313 In 1640 there were 3x as many Africans as Europeans in Mexico.
• P323: Katana-swinging Japanese helped suppress Chinese rebellions in Manila in 1603 and 1609. When Japan closed its borders in the 1630s Japanese expatriates were stranded wherever they were.
• P.359: English Puritans launched two colonies, one at Plymouth and another off the coast of Nicaragua in 1631.

Like I said, very interesting and there’s a lot more. If you like history in general, or if you’re looking for a fresh take on China, this is definitely worth reading.

The Chinese Twitter (English version)

Now available on the US App Store: Sina Weibo 微博 download here: http://itun.es/igk6zp then follow me at http://weibo.com/2140336255 and see why 200M users like it.

Note: to create an account you'll need some rudimentary knowledge of Chinese (either from something like Google Translate or from a helpful friend).  I assume they're working on an English version of the web site too of course.

 

 

Hard to know for sure

I keep running into this problem of the limitations of knowledge. Today, a professor friend of mine reminded me how the one thing you take away from earning a PhD is how little you know of your field of study. We were discussing the old saying that after your first week in China you’ll feel like you could write a book about the place; after a year you’ll think you could write a magazine article; after a few years you give up writing anything.

The Useless Tree Blog discusses (via China Law Blog) a recent interview with Chinese official Wang Qishan claiming that China is only understandable to insiders like himself, but my first thought is “what does it mean to understand in the first place.” Does anybody really know?

Then there’s Peter Norvig’s excellent review of a recent remark by Noam Chomsky dismissing the use of statistical techniques in linguistics. Chomsky apparently thinks real scientific understanding requires more than a statistical analysis of a bunch of data—you have to synthesize that knowledge, presumably into simpler, fundamental rules that describe the Universe. That’s super-hard, and except in Physics almost always turns out to be an approximation anyway.

This is just restating the problem identified by Hayek in The Use of Knowledge in Society and by countless others who reflect on the limitations of what we know.

Society gives too much credit to people who appear to know, but I think self-confidence is no substitute for understanding.