May 2009 Archives

Working for the man.
Foreigners often describe China as "different"; a mysterious land whose people have a perplexing way of getting things done. Yet, when it comes to economic data, foreign "experts" look at China as they would look at any other country. I am not talking about those who ignore the fact that China's government tweaks economic indicators to fit pre-defined goals. Enough has been written about that (here, herehere and here, for example). I am talking about the way in which well-regarded western publications look at real indicators, and the assumptions they make in the process.

This morning, for example, I received a newsletter from RGE Monitor, Nouriel Roubini's consultancy firm. Reading it, I learned that 'unlike many global markets, the residential property market in China is showing some signs of stabilization'. The facts are correct. The free fall in residential prices has stopped, and in some places there are even slight increases.  A sign of recovery? not necessarily. 

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"The People have lost confidence in the Government. The Government has decided to dissolve the people and appoint another one." (Bertold Brecht)
We live in times of great darkness and confusion. A new study by the Economist Intelligence Unit provides a good summary of government and corporate attitudes towards the financial crisis, its causes, and the actions that will get us out of it (PDF here). The study is based on the opinions of '400 senior business people in companies around the world', as well as those of experts from the Economist Intelligence Unit and various business schools. Key findings include: 
...almost 60% of respondents agree that the current crisis has "fundamentally changed" capitalism... respondents believe that there will be more government oversight, more economic nationalism... Almost one-half of respondents favour more financial regulation in non-banking industries and a similar percentage favour new regulations that limit risk-taking across the entire private sector... regulation is no longer seen as counter-productive meddling in otherwise perfect markets, but a prerequisite for a functioning global economy...etc...etc...
In summary, the government (and its friends) lost faith in the Market. The Government has decided to dissolve the Market and create a new one. Most executives don't think it's such a bad idea. 

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Tainted Love.
Girl at Beijing's Intro Electronic Music Festival. More here
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- "What do you remember most vividly?"
"The students singing as they were being shot. And a student, a girl, who said to me, 'What can they do to us? We have our whole future ahead of us, and we've seen it.'"
BBC News Report, June 19, 1989. Quoted in Greil Marcus's The Dustbin of History
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Following my previous post about the prevalence of 'fairness' over morality and common sense, I came across the following quote from Ronald Reagan, 1979:
"Someone once said that every form of government has one characteristic peculiar to it and if that characteristic is lost the government will fall. In a monarchy it is affection and respect for the royal family. If that is lost the monarch is lost. In a dictatorship it is fear. If the people stop fearing the dictator he'll lose power. In a representative government such as ours it is virtue. If virtue goes the government fails. Are we choosing paths that are politically expedient and morally questionable? Are we in truth losing our virtue? ... If so we may be nearer the dustbin of history than we realize."
The term 'dustbin of history', it seems, was first coined by none other than Leon Trotsky, co-leader of Russia's October 1917 revolution. While ratifying the revolution at the Second Congress of the Soviets, members of the the center and right wings of the Socialist Revolutionaries left the room in protest, claiming that Trotsky and Lenin had no legal right to seize power. As they walked out, Trotsky shouted:
"You are pitiful isolated individuals; you are bankrupts; your role is played out. Go where you belong from now on -- into the dustbin of history!"
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weight in gold
It's quite simple, really. Take Norway and India, for example. Norway has a population of 4.7 million and a GDP of $387 billion; India has a population of 1.17 billion and a GDP of 1.41 billion. Norway's GDP is 34% of India's GDP. This means that 4.7 million Norwegians have the same economic power as approximately 400 million Indians.  

Sure, an Indian living in Mumbai can live decently at a much lower cost than a Norwegian living in Oslo. But, technological advances in communication and shipping mean that the Indian has to compete with the Norwegian over a growing list of commodities that have a fixed, global, price. This includes oil, gas, precious metals, as well as wheat, fruit, and even soft drinks. Increasingly, It also means that a computer programer in Oslo must charge an hourly rate low enough to compete with that of a programer in Mumbai. 

Everything becomes a commodity, everything is exchanged based on a fair price. 'Fairness' is overtaking morality as the ethical basis of all transactions. It's business, not personal. In this way, the world is becoming one big mass of workers, employed by investment dollars that jump from one opportunity to another at the speed of modern communication. Any organization that does not strive towards the highest possible profit, at all costs, is deserted for the sake of those that do. 

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"This life is a hospital in which each patient is possessed by the desire to change beds. One wants to suffer in front of the stove and another believes that he will get well near the window..."
I found a wonderful website with English translations of Baudelaire's Flowers of Evil and The Spleen of Paris, side by side with the original French text. Enjoy. 
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"Of course, it is possible that in the future a more advanced political system than parliamentary democracy will emerge. But that is a matter for the future. At present, there is no other.

Based on this, we can say that if a country wishes to modernize, not only should it implement a market economy, it must also adopt a parliamentary democracy as its political system. Otherwise, this nation will not be able to have a market economy that is healthy and modern, nor can it become a modern society with a rule of law. Instead it will run into the situations that have occurred in so many developing countries, including China: commercialization of power, rampant corruption, a society polarized between rich and poor."
Zhao Ziyang, Premier of the People's Republic of China, 1980-1987. Taken from his 'secret' journals
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Dreaming different dreams.
Living in China, one often takes part in surreal dialogues, such as:

- What beers do you have?
"Calrsberg, Qingdao, and Heineken"
-OK, get me a Qingdao
"Draft or Bottle?"
- Draft
"I'm sorry, we don't have draft"

OR

-Where are you from?
"Israel"
- Funny, you don't look Israeli
"Really? Did you ever see an Israeli person before?"
- Yes
"How did he look like?"
- He looked like you.
  
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Note: The views and observations expressed on this web site are published for the sake of public discussion and do not represent my personal opinion or the opinion of my companies, clients, and/or employers. If you would like to get my opinion on anything, ask me.

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