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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Hanoi, Vietnam. February 2010
Yesterday Google remembered its Don’t be Evil maxim and announced A New Approach to China:
We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. […]
These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.
This has been long time coming – and by long I mean a few months as apparently Google has recalled most of their engineers from China leaving behind skeleton staff in September last year – and yet vastly overdue. The move is surprising as the world got accustomed to ‘business’ justifications for dealing with totalitarian states – size of the market, encouragement of progress, which in turn breeds freedom, benefits to the oppressed, er, markets. Blah, blah, blah.
In as much as progress is encouraged by competition and customer sophistication, this argument is valid. In as much as these need to evolve in a framework based on the rule of law, lack of corruption, some respect for property rights and notions of individual rights and freedom, it clearly doesn’t apply to countries like China. During the Cold War, the detente of the 70s and its aftermath have shown that trading with the communist countries does not have marked impact on their political ruling class. Actually, it does as they are the ones who benefit from any foreign investment and trade. Both Coca-cola and Pepsi were widely available and I do not recall any tangible improvement to dissidents’ existence. Fair enough, Google is in business of information distribution and filtering, which is far more relevant to any regime opposition, however, what with compromise and censorship, it has ruled itself out that ‘game’ some time ago. As for technology transfer and indigenous competition they certainly had a constructive role – Baidu, the local search engine has most of the search market, having learnt much from the likes of Google.
A cynic might say Google has not much to lose by exiting China, the revenue from that market was ‘immaterial’ by their own account. Let the cynics have their moment. There are enough people and companies who worship Google as the ultimate modern corporation, or simply as a success story, and the signals this move would send can only be good. And long overdue.
I am not holding my breath for other companies to follow. There is no comment from Yahoo or Microsoft as yet but I suspect this quote by Tang Jun, former President of Microsoft China sums up a lot of thinking in the business world right now.
For Chinese netizens, it does not matter whether Google quits from China or not. But this was the most stupid decision they had ever made since giving up China was giving up half of the future world.
Mr Tang Jun is right, of course. The Chinese government and its business champions are hardly going to notice and bother even less. They have been hoovering up some of the best software engineers the Western businesses have made redundant in the last couple of years and growing their own breed too. All of the search engines in China have helped the Chinese government to censor speech, some of which we covered here before. Other companies, namely Cisco’s Panopticon Chinoiserie, have assisted in more active ways, though last year, the government tried, but failed, to force computer manufacturers to install a censorship program on their new PCs called Green Dam. Perhaps there is hope but, for now, count me among the cynics.
Fellow imperialist Norman aggressor Harry de Quetteville does an exquisite take down of Oliver Stone in the Telegraph. It is so delicious that extracting a passage just does not do it justice.
…Oh I just cannot resist…
I pushed a woman under a bus this morning. Nice looking old girl she was, looked like she’d just had her hair done. Maybe she was off somewhere special, but we won’t know now will we, not since I pushed her under the bus.
She hadn’t done anything wrong, apart from being old. But you wouldn’t believe the hoo-ha the whole scene created. Some people next to me looked positively aghast as those big double-decker wheels rolled over her. Then some others jumped on me and held me down until the police arrived.
Read the whole thing. Simply splendid.
I will be in Dubai on January 16 and again on February 7-9, Singapore January 17-18 and again on January 29-31, the Gold Coast and Brisbane from January 19 to 28 (except January 25-26, when I will be in Sydney), Hanoi from January 31 to February 4 and Melaka from February 5-6. If anyone feels like buying me a drink in any of those locations, please let me know and I will see what I can do.
I yesterday went shopping for an LCD television for a friend of mine. I went to Richer sounds (a splendid and rather uncharacteristic British retailer known for selling high quality electronic merchandise at low prices from relatively unfashionable locations where the rent is low, providing fine customer service and treating employees well), and I ended up buying a Sharp TV. Interesting company, Sharp. People sometimes think the name is a little odd. For what it is worth, the company originally made mechanical pencils for engineering purposes, and they wanted to make it clear that they were very sharp (true story).
Japanese companies seem to divide into two kinds. There were pre-WWII monoliths – the so called zaibatsus. American policy after the war was that these were far too powerful and that they were to be broken up into smaller companies. This American policy failed. They zaibatsus were theoretically broken up into smaller units, but they retained a complex arrangement of holding companies and cross shareholdings in which management control largely remained in place even though the companies had theoretically been split up. They evolved into post war industrial groupings known as keiretsus. These companies remained politically well connected, and when Japan attempted to grow its exports through government directed industrial policy, these were the beneficiaries of it. These keiretsus included Mitsui/Toshiba, Mitsubishi, Hitachi, Matsushita (Panasonic), and others.
As I said, these well connected companies were recipients of government largesse, and those who would wish to praise government industrial policy would tend to construct a story that this led to Japan’s industrial success in the 1970s and the 1980s.
But of course, the story is more complex than this, There is a really good book about this, We Were Burning: Japanese Entrepreneurs and the Forging of the Electronic Age by Bob Johnstone. The interesting part of the story is that although the keiretsus did benefit from the growth of the Japanese electronic industry, they were not where its innovation came from. The companies that were the heroes in this regard were small, non-existent or unfashionable in 1945, or were discarded or disdained pieces of broken zaibatsus, In particular, we are talking companies like Seiko-Epson, Canon, Yamaha, or even Sanyo or Honda or Suzuki (the Japanese government tried to micromanage the car industry, but the motorcycle industry was seen as less interesting, and so that is where the interesting companies ended up coming from).
In electronics, in the 1970s, Sharp’s research was led by Sasaki Tadashi, whose enthusiasm earned him the truly glorious nickname of “Dr Rocket” – personally I would almost kill for such. In that era Sharp pretty much invented the electronic calculator and the LCD display. Sharp remains a leader in LCD display technology to this day.
To the extent, that in this day of LCD television, Sharp is the only Japanese company worth mentioning in this market. Sony – a company that rode a totally unique route between the keiretsu and the post war upstart, but which in the end did a better job of selling itself as a brand than an innovator – was the undoubted leader in the era of CRT televisions, but (perhaps as a consequence) totally missed the transition to flat screens. A lot of fancy televisions are sold today under the Sony brandname, but these were generally actually made by Samsung, or (in certain high end cases) by Sharp. The only Japanese company that actually makes televisions today is Sharp. The company that always was the great innovator: the company that Sony pretended to be.
Which is why I was happy to buy such a set for my friend.
Peter Schiff, as ever, has a nice take on an argument that I have heard expressed from various commentators in recent years and months: China saves “too much” and its “excessive” savings are the source for all this Western borrowing – and now the financial SNAFU – so Chinese folk need to get their wallets out, spend more, be less frugal, so that this “imbalance” in the world economy can be corrected.
Schiff gives this line of thinking fairly brutal treatment, but as he says, there is also some truth in it. Because China’s exchange rate is kept artificially low against the dollar and other currencies, Chinese exports are cheaper in Western markets than they would otherwise be; this means that in turn, China earns large amounts of foreign exchange, which in turn get invested in things like Western government debt securities, such as US Treasuries. This buying of Western debt like Treasuries has enabled Western consumers to enjoy credit for cheaper than otherwise would have been the case, fuelling the credit boom, etc. Of course, what this line of thinking tends to overlook is that if Chinese savings are based on real earnings, and those earnings are being invested in Western productive assets, then how is this a problem? Consider: part of the 19th Century, the UK invested enormous sums of its capital in places such as Argentina, the US, Canada, Australia, India, and so on. This export of capital was entirely benign as it generated long term returns based on real investments. Would it have been better had this process not happened?
I agree with Mr Schiff that the Chinese yuan will float freely eventually; when it does so, Chinese exports will be more expensive in Western markets, while Chinese consumers will be able to buy more Western goods, and so the “problem” of all this surplus capital will disappear or be less pronounced. The “imbalance” will begin to rectify itself, given the chance. And that means the West will have to rely more on its own savings to generate investment in the future. The question, of course, is whether the tax and regulatory climate makes that process happen smoothly or not.
There have been many different explanations of what has gone awry in the world economy in recent years, and of course any search for an explanation cannot ignore China and the impact of its own policies. But it strikes me as unjust to put China in the dock. The prime driver of the crisis has been Western monetary incontinence, a largely home-grown force.
Microsoft has no taste. Who in the name of Allah thought this was a good idea?
Update: Here is some proof that this is real. Some people may find this video disturbing.
Here is a nice little video, via the blog of Tom G. Palmer, singing the praises of free trade, ahead of the upcoming G-20 meeting in the US. Incidentally, the recent decision by The Community Organiser to slap tariffs on Chinese tyre imports – focusing particularly on China – looks to be especially dumb. Given that the Asian giant holds rather a lot of US debt, and has the ability to switch dollars for euros on a vast scale, making such a move seems almost reckless. About as clever as moving to switch off anti-missile defence over Poland on the 70th anniversary of Hitler’s invasion of Poland. In the latter case, the decision may have been right on specific military grounds, but the timing was dumb. Was not part of the appeal of the chap from Chicago that he did not make such errors?
We were promised that Mr Obama would be all smooth and charming to other countries, unlike the terribly vulgar Mr Bush with his Texan drawl (sarcasm alert). But I am not really sure that Mr Obama is not as capable of making an even more dangerous mistake: he pisses off really important, or potentially important, allies and large economies in a position to act. Annoying the French, as Mr Bush wonderfully did, is hardly a mistake, but hitting China with a very public act of protectionism, most decidedly is.
Sometimes it is the willingness of a person to be brutalised, rather than its enforcement as such, that chills me to the bone. Check out this story.
Of course, if the woman genuinely consents to such treatment, then I suppose it would be no different to that of a person who visited S&M bars and liked being beaten up, etc. But a lingering suspicion lurks that this woman, and many others, are not really acting with a great deal of control over their lives.
This article in the Independent articulates an argument that I summarise thus: North Korea is developing nukes, it is firing rockets and other stuff into the sky near or above its neighbours, but the country is a basket case; it is led by a nutcase and all this stuff is in fact it is a sign of weakness, not strength. In other words, nothing much to worry about, please move along, ManU are playing Barcelona in the Champions League, etc.
I actually accept that there is probably a great deal of truth in this “nothing to get overly worried about” line. There’d better be. There is not much, short of war, with all the terrible costs it would bring, that neighbouring countries such as South Korea, China or Japan can do to pressure North Korea that they have not done already. (Japan, by the way, has been busily expanding its naval forces). When in the past I have briefly mentioned North Korea, some commentators on Samizdata will point out that the West (ie, the US), should not, or has no need or business, to defend South Korea or indeed to act as if North Korea is a “problem” to be fixed. Let the locals sort it out, etc. Well up to a point, but there will be wider effects to think about if nuclear weapons are ever used, or threatened to be used, against what is, after all, a broadly free and friendly country like South Korea.
I think part of the problem is that as long as the US has kept significant armed forces in the region, it can create a sort of moral hazard problem, in that the countries thus protected fall out of the habit of learning to defend themselves, or understand its costs. I am not an expert on South Korean public opinion, but I cannot help but wonder what the impact of a long-running US presence will have on creating a possible false sense of security. One of the things that is clearly coming out of the current economic crisis, and the wrecked state of US public finances, is that there will now be enormous pressure on any US administration, even one led by more hawkish people than Mr Obama, to cut, or just limit, defence spending. South Korea has not escaped the impact of the credit crunch, and if it was not willing to shell out more money on defence five years ago, it is hard to see it doing that now, unless it is completely terrified of an attack. I am sure that the top brass in North Korea understand all this only too well.
Let us hope it is a sign of a weak, not strong regime. But remember also that weak, or desperate countries can do desperate things, such as the Argentine Junta’s decision to invade the Falkland Islands in 1982. As we know, Argentina lost that conflict, and it helped destroy the regime. But Argentina did not have, or threaten to use, nukes.
This story is bizarre: China is ordering folk to smoke to boost the economy? Maybe the Chinese authorities figure that with air pollution already so bad, what could be any worse?
It goes without saying that being a good liberal that I am, I consider it as outrageous for a government to encourage smoking as to use invasions of property rights and censorship of things like adverts to stop it. This sort of issue cuts both ways. What next: forcing folk to get hammered every evening?
This item about the recent missile firing by North Korea reminds us that in all the attention currently being focused on the credit crunch and the policies of governments to deal with it, that geo-political threats cannot be ignored. It is, I suppose, all too easy to dismiss the leader of North Korea as some sort of harmless nut if you are living thousands of miles away. For the Japanese, who fear that a leader of a broken country might try something really stupid – as dictators tend to do – the situation is far less easy to shrug off. And Japan had better reckon without a blanket promise of support from the US in the future. I hope the anti-missile defence systems that Japan has installed are in good working order. Japan now has a pretty useful navy.
Not a happy situation. At all. Here’s an agency report on the rocket launch.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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