China: the labor revolution has begun

pic here

FT article and editorial on the recent spate of Western companies giving into local Chinese labor demands for higher wages.  The FT says “Chinese workers are now in revolt”!

Believe it or not, but these are the next-best set of problems for both China and the global economy.

As the FT editorial argues: “Higher wages are a goal of successful development.”

These wage hikes are just the beginning; the Chinese labor force is starting to understand its own power in this ongoing struggle.  The FT editorial says:

The remarkably low share of wages and salaries in GDP makes China the most “capitalist” large economy in history.

What will Chinese and Western firms do?  They will be forced to move ever inland—a self-limiting prospect in terms of profit (longer overland transpo costs), and yet, this is the best possible trend for China itself—the harmonization of development coastal-versus-inland.

Then there’s the larger reality that the numbers of youth entering the workforce will slowly decline over the long-term, raising their bargaining power ever more.

Doesn’t mean China declines rapidly as a manufacturing power.  It just means this playing field evens out progressively over time.

All good stuff that shows how China pays the globalization “price” just as much or more than the world suffers the “China price.”

Nothing magical about China’s state capitalism; the same leveling market dynamics work their wonderful magic here as anywhere else.

"When we want cheap, we go for China"

pic here

Yet another FT on Africa.

From the explosion of mobile telephony to bulging profits of beer companies, evidence of expanding consumer markets in Africa abounds.

Nice.

Hear the African middle-class consumer speak:  “When we want cheap, we go for China.”  Estimates are that 90% of appliances in the major local retail shops are from China, because their prices are about 75% cheaper than the foreign competion and 50% cheaper than the local producers’ stuff.

There's gold in them thar mobiles!

ad found here

Another FT on Africa.

How mobiles fuel banking in infrastructure-hostile environments in Africa:  Better to pay over the phone than carry the cash or waste time going to branches that do not exist.  All sorts of everyday transactions are suddenly greased to the point of actual convenience!

That growth in e-banking, in turn, fuels the ambition of local banks to expand services locally and expand the reach of their operations geographically—an incredibly virtuous trend generated primarily by sheer connectivity.

The key dynamic is the spread of banking services to the previously “underbanked.” The extension of short-term credit to individuals makes capitalism work—as in, I will gladly pay you by mobile for a hamburger today.

Credit to ODA (official developmental aid) where it is due:

Vodafone, the British telecoms company, with a local partner and the backing of Britain’s Department for International Development, launched one of the most celebrated mobile banking initiatives: M-Pesa of Kenya.

This is basically telecoms moving into banking.

What hath teleGod wrought?

Pic here

More FT on Africa as part of the World Cup focus.

The explosion of mobiles across Africa is described as the most important economic development of the last half century, revolutionizing lives and transforming society in ways all that official developmental aid never did. 

No surprise, all that rising individual-level connectivity coincides with dramatic growth in GDP and sweeping new public attitudes toward business.

Ah, but what did Barnett’s “connectivity” ever do for poor people?!?

Plenty, it turns out.

But doesn’t it just piss them off when they realize they can’t be rich like the West?

Apparently, not as much as it jazzes them to exploit new opportunities.

And we’re talking an Africa that’s still only in the 40-50% mobile penetration rate.  The continent as a whole is predicted to pass the 50% mark this year, with at least 8 nations bragging about a 100% penetration level!

Turns out the poor are not to poor for mobiles to be significantly empowering—and profitable—for everybody involved.

The FT piece:

Such success has revealed the continent’s entrepreneurial flair—when the dead hand of the state is lifted—and revived other sectors, particularly banking and consumer industries.

You know that bit about the Indian farmer choosing a mobile over an indoor toilet?  Well, a lot of Africans will pick the mobile over that much additional food.

Why?  Connectivity breeds opportunity.  Along with the mobile penetration, we see foreign direct investment balloon for both oil & gas nations and non-O&G economies.  Both groups attracted about a billion in 1989.  Both now attract in the range of $4B annually now.

Big Oil to BP: No, you're the problem!

Artwork here

FT piece.

BP, naturally, keeps selling the Deepwater Horizon disaster as indicative of industry-wide problems, while the rest of Big Oil says otherwise—also to no surprise.

Other firms want deep-water drilling to continue, stating that their practices are better.

What I found interesting about the chart showing where everybody is drilling in the Gulf:  Deepwater’s water depth is listed as 5200 feet, but of the 18 other rigs listed, 8 are equally deep or a lot deeper (in the 7-8,000 ft range).  Companies drilling at that deeper depth include Shell, Chevron, Anadarko and Noble.

Of the 33 rigs left idle by Obama’s ban, we’re talking costs of about $12m a day.

The industry plans to invest about $170B in deep-water drilling tech and gear between now and 2014, or something on the order of $30-35B a year.

Naturally, BP’s massive screw-up (less the original accident, I would wager, than the incredibly incompetent response since) will perturb the entire industry, because America’s new rules on the subject will have global impact.

Latinos leaning more Democratic

WSJ story saying that Hispanics who registered to vote since the last midterm are significantly less likely to vote GOP than those who registered 4 years earlier.

The fastest-growing bloc of voters in the country is trending Dem.

GOP affiliation fell from a bit from 23% to 19%, while the Dem share rose from 50% to 58%.  Fewer independents.

The driver is no mystery: anti-immigrant fervor is more identified with the GOP.

The good news for Dems is somewhat balanced by the new non-Latino voters, who favor the Dems over the GOP by a lesser margin (41% to 34%).

Chart of the day: How much aid is too much?

Click smaller one below to enlarge.

Experience says once a country gets above approximately 15% of the GDP in aid, they're in trouble (it's a diversionary effect that also allows the government to care less what its public thinks).

This slide shows net aid as a percentage of government expenditures, where the percentages are naturally going to stand far higher.

What stands out:  

1) the single-digit crowd of North Africa and the southern cone (Morocco, Algeria, Tunisia, Libya, Egypt, South Africa) and the outlier of Equatorial Guinea; and 

2) the 100-plus-% crowd of Guinea-Bissau, Sierra Leone, Liberia, C.A.R., Congo, Mozambique, Malawi, Rwanda, Ethiopia and Uganda (98%).

The Politics Blog: 5 Things You Didn't Know About the Next Al Qaeda

Two Jersey boys by the names of Carlos Eduardo Almonte and Mohamed Mahmood Alessa were arrested over the weekend at JFK Airport as they sought to begin their jihadist pilgrimage to Somalia via Cairo. Before getting on the plane, they had dutifully lifted weights, played paintball, and — unfortunately for them — unwittingly bragged to the Feds about their dreams of killing Americans. Their training was to be completed by al Shabaab, the infamous hardcore "youth" militia that owns south-central Somalia. Because al Shabaab made our State Department's terrorist organization list in 2008, these lost boys face enough "conspiring to..." terror charges to land them in jail for the rest of their lives.

Setting aside your natural fears that America is suddenly crawling with any number of Islamic sleepers, here's five things you should know about al Shabaab.

Read the full post at Esquire.com's The Politics Blog.

NOTE:  Got this assignment Monday morning as I flew out to Baltimore.  Vonne pushed cites to me, and I wrote it on my laptop while sitting alongside the Pentagon on a beautiful sunny day.  Sent it off that night and it went up yesterday morning, while my travels continued.

The "retreat" from assimilation isn't all that it's splintered up to be

WSJ story.

Recent study suggests that Hispanics are less often marrying non-Hispanic whites, hence the fear of lessening assimilation.

The trend of past decades for both Hispanics and Asians immigrants was that successive generations married outside their race in ever higher percentages.  So are we seeing a reversal!

Clearly, social taboos on interracial marriage have faded dramatically over my lifetime (almost 5 decades), but here’s the trick with the last two decades seeing a serious upsurge in Asian and Hispanic immigrants:  now there’s a lot more of them available in the marriage pool, so, what was assimilation in the past due to limited choice, is now lessened. 

As a “retreat from intermarriage” goes, this one is fairly defensible and hardly anything to get worked up about.  I mean, Hispanic women now marry outside the pool in the range of 15-20% (2000s) versus 20-25% (1990s).

The benefits seem clear enough for the individuals in question: 

The massive influx of new immigrants from Latin America and Asia has not only fueled the opportunity to marry one’s co-ethnics, but also revitalized ancestral and cultural identity.

So says a researcher.

Meanwhile, we’re told that the rate of Asian women marrying white men “stagnated” at 40% between 1980 and 2008.  Oh my!

Long-term, though, experts expect plenty of inter-marrying.  Why? Workplaces are far more integrated than in the past.

Still, plenty of anti-immigrant feeling post-9/11 and with the hard economic times, so the current “retreat,” such as it is, underwhelms me.

I am Africa, hear me roar!

FT story citing Boston Consulting Group report:  Africa’s top 40 firms are beginning to compete successfully on the global stage, helping trigger national growth rates that rival those of the BRICs.

So yeah, countering the notion that globalization impoverishes, we’re seeing broad boat-lifting on the poorest continent in the world—right on the heels of the worst financial/trade crisis ever endured by the modern global economy!

Since 1998, the 500 top African companies have been growing in the range of 8% a year—or the China pace.

No question the resource draw from the rising New Core cohort propels a lot of this growth.

The  so-called lions are Algeria, Botswana, Egypt, Libya, , Mauritius, Morocco, South Africa and Tunisia.  So really the northern tier and the southern cone and the great, Singapore-like connector in Mauritius.

The collective per capital GDP of this crew stands at roughly $10,000, which outranks the BRICs collectively. 

So the old Asian tigers are now being matched by the African lions.

Quite the “de-globalization.”

The national security strategy that isn't

Cartoonist here

Reading the new National Security Strategy, one is struck by how little it actually talks about national security and instead speaks mostly about America's economic renewal (security assets listed include a strong economy, fiscal discipline and access to affordable healthcare).  

All the right things are said about enlisting the aid of rising great powers, and everybody, including the FT, admires the calmer tone, but this document doesn't really clarify the war aims in Afghanistan--for example. 

The NSS is often a list-drill, but this one is especially incoherent:

It also warns against imposing US values, yet says that building "government capacity" is essential.  Or take domestic counter-terrorism.  Rightly, the White House wants the issue kept in proportion--yet the strategy promises ever more resources for aviation security and intelligence gathering as though cost, disruption, and infringement of civil liberties were no object.

To me, the document sort of begs off on the question of US leadership, which is certainly a route for encouraging others to do more.  But it signals an America that's adjusting, adjusting, adjusting--without much ambition for leading.  

Again, maybe this is all we can expect with this administration, but it strikes me as largely a waiting strategy.

New rules force Lockheed to shed PA&E

WSJ story.

Sad for me to see because I played a small role as outside cheerleader on the purchase (I ended up giving speeches to a couple of the early Lockheed-Pacific Architects & Engineers corporate gatherings.

But CEO Bob Stevens announces he will be putting PA&E up for sale because new federal rules from last year (Weapon System Acquisition Reform Act of 2009) places stricter limits on mil-industrial companies who provide both managerial support and then seek to build on systems that are ultimately slotted in under the same--i.e., it's a conflict of interest to both manage programs on behalf of the government and then seek to bid on subordinate contracts.

PA&E was acquired in 2006 as part of Lockheed's move into soft-power/second-half/SysAdmin activities.  PA&E continues to do well; it's just that the new rules force divestiture.

To me, this is part of the yin-yang struggle within DoD:  it knows it's stuck with a lot of SysAdmin workload for the foreseeable future, but it fears the military-industrial complex getting too used to horning in on these activities--contract-wise--because the Pentagon wants these functions to migrate elsewhere ultimately, and the more the mil-indusrial complex settles in, the harder that becomes.

So it's just hard to have it both ways, as both the Pentagon and Lockheed find out.

More evidence of China's evaporating "cheap labor"

Foxconn is the world’s largest electronics contract manufacturer, meaning it’s contracted by huge Western firms (Dell, HP, Sony, Apple, Motorola) to build on its behalf in cheaper-labor locales, like Asia and China in particular.  This is how the West remotely controls the bulk of China’s manufacturing exports.

Well, that easy labor advantage for China is fast evaporating.  I routinely harp on the demographics (2010 is the “golden year” when the ratio of dependents to workers hits its lowest mark, only to rise from here on out thanks to a rising number of elders as China ages more rapidly than any society in history), but the more compelling short-term issue is rising demand among coastal labor for higher wages.

And when you don’t give it to them, they start staging nasty, attention-grabbing suicides in your factories.

So booyah!  Here comes a 30% increase for worn-out workers in that communist paradise, and guess what?  That increase eventually gets passed on to consumers, meaning China’s labor advantage erodes.

Where does it go next?

Some goes to interior China.  Some goes to SE Asia.  And China will direct some to Africa as part of its penetration/accommodation there, as it seeks to slot in cheaper African labor under itself as it moves up production chains.

All good stuff, but it shows you, there is no such thing as a permanent advantage in cheap labor.

The flag follows trade

Gist:  America under Obama seeks to enlist the aid of rising great powers in shaping the international order for the better.  Problem is, most of these powers are just feeling their oats, and their fist instinct ain’t to take orders from Washington.

Hence, say I, all this “world without the West” bravado, which is thrilling for those pushing it, but it will wear off once larger realities set it.

Hillary Clinton quote:  “Convincing people to go alone with us requires different skills and ways to exercise our power than it did 50 or 100 years ago.”

True enough for 50 years ago, but 100 years ago WE were the rising power that required difference skills from established ones seeking to enlist our help, so some finer sense of the historical sequencing here, please.

Series of cool charts in the piece lay out a logic I first spelled out in PNM:  politics follows trade nowadays, unlike during the Cold War when trade (and investment) followed the flag.  That too is part of the Cold War peace dividend staring us in the face.  The charts show how, for Brazil, Indonesia, South Africa, and Turkey, China now trades with each to the same degree—or better—than the US did in the past or trade.

This is an inescapable reality:  first comes the trade, then the investment, then the infrastructural network ties, then the political friendship, and then the confluence of security interests.

Expecting anybody to choose us over China with those dynamics unfolding inexorably over time is to ignore reality.

So no, we won’t be fighting China, and neither will any other rising power—save maybe India, but even that seems far fetched.

And yeah, that too is part of the Cold War peace dividend, although it’s really part of America’s larger international liberal trade order-cum-globalization peace dividend, and it should most definitely be viewed that way.  No hegemonic power before us was ever able to structure a system in which numerous great powers could rise simultaneously and peacefully.

But again, America “doesn’t do grand strategy” because we’re all dreamy pinheads, according to the East Coast liberal establishment’s conventional wisdom.

Africa as a compelling new source of coal?

Map here

FT full-pager on coal rush into Africa.

Turns out Africa has got a lot of coal, and lots of the best kinds, in locations that are relatively cheap to mine.

Why not done up to now?  Coal is fairly dispersed globally, so until emerging economies start running through their own instead of exporting to the advanced West, apparently the economic impetus just wasn’t there.

But now it’s there in spades (pun intended).

So as part of the everybody-is-coming-to-Africa meme, coal is a rising quotient of activity.  This comes on top of all of the other minerals and gas and oil.

This is why, “The growth rates achieved during the past 17 years are comparable to those of the east Asian economies in the 1970s and early 1980s.”

This is why I call globalization the gift that keeps on giving.  Europe gave it to us in the 1900s (screwing everybody else with colonialism), and after the tumult of the first half of the 20^th century, we gave it to East Asia.  Now Asia is doing the same to much of the Gap but especially to Africa.  America doesn’t create that international liberal trade order (first just in the West) after World War II, this doesn’t happen.

Good thing America can’t do grand strategy, eh?

Story focuses a lot on Tete in Mozambique, where everybody in the emerging economy universe is there with cash in hand for one of the biggest and best coal deposits in the world.

You want to spot a Cold War peace dividend, this is part of it.

In 1989, US trade with Africa was about 13% of the continent’s total trade, and what China, India, Brazil, Korea and Malaysia managed  in total was maybe 5%.  Now China’s total (closer to 12%) is more than America’s (just over 10%) and the other four are closing in—cumulatively—on another 10%.

So African trade with the quintet goes from about 5% in 1989 to more almost one-quarter of the continent’s total trade, while America’s share holds steady.

More generally, Eurozone trade decreases from about one-third of Africa’s total to more like one-quarter, while emerging economies’s share goes from basically nowhere to close to half over the two-decade period since Cold War’s end. 

That’s a big infusion of new demand and new investment, with hundreds of thousands of entrepreneurs arriving as part of that slipstream—mainly from China.

No, it’s not all good, but in aggregate, it beats the hell out of the past, because the West’s draw on resources—at best—created booms and busts as part of those regions’ business cycle.  Now we’re seeing sustained boom-times demand from a far larger portion of the global consumption base that has very long term infrastructure development and energy consumptions trajectories.

A lot of experts fret over a globalization “unraveling” from a Western perspective, but the larger truth is a globalization on steroids for the rising New Core and those Gap regions that get immediately tied into that stunning growth and the emergent middle class it creates.

A familiar sort of populism, from the ground (literally) up

NYT story that warms my heart:  average Chinese citizens getting uppity over development issues--or the real estate sort.

When China’s land boom excited a frenzy of popular resistance late last year — including headline-grabbing suicides by people routed from their homes — Chinese policy makers finally proposed a solution: rules to protect citizens from unchecked development and to fairly compensate the evicted.

Today in Laogucheng, a dingy warren of apartments and shops slated for redevelopment on Beijing’s far west side, the fruits of that effort are on vivid display: a powerful developer is racing to demolish the neighborhood before the rules are passed. And about 700 gritty homeowners are adamantly refusing to move until they get the fair deal they hope the rules will provide.

“This is a limbo period,” one holdout, Tian Hongyan, 49, said after a stroll amid the rubble of his half-bulldozed neighborhood. “And during it, we’re seeing even more sudden and violent demolitions occur around the country.”

China is not a good setting for a Frank Capra tale, but people do have influence over their autocratic masters. Top officials are worried that the property rush — which has led to soaring prices for urban real estate and low prices for old homes and farmland seized for development — is enriching local governments and well-connected developers at the expense of ordinary people and social stability.

Protests like those in Laogucheng — including self-immolations and deadly standoffs — have forced officials to at least consider measures to make it harder to seize property and turn it over to developers without fully compensating those who live on it or use it. 

The lack of rules is the usual suspect, and nastiness ensues:

Without updated rules, local governments pick renewal sites at will, then leave negotiations with residents to developers, demolition companies and low-level “demolition and relocation offices.” They frequently low-ball home-purchase offers, cut off utilities and even hire gangs of thugs to terrorize homeowners.

Powerless to stay and too poor to move, many Chinese have rebelled.

As usual, the Party is forced to choose and/or balance between growth and angering the population too much.

Chart of the day: The Gaza blockade

From The Economist.

If the notion is, give the guy a fish and you feed him for a day, but teach him to fish and he eats everyday, then I detect a distinct desire on Israel's part to make sure Gazans learn how to do nothing for themselves.

Hard not to argue that these are essentially prison conditions, designed to punish more than allow economic rehabilitation.

Convince me otherwise.

Now I take it ALL back on the myth of "deglobalization"!!!

NYT story kills the one "give" I made in my recent WPR column on "deglobalization's" many myths.

My mistake, because if I hadn't been so busy turning 48 (Sniff! My 49-year-old wife just joined AARP, but she's got a MA in elder studies, so I'm calling it a professional quirk) and watching Em graduate from HS (frugal babe, she refused to buy her academic honors and Japanese honors cords), I would have noticed this article just in time for the piece I wrote last Saturday!

In the piece, I admitted that guest worker numbers depressed, and thus so did remittances.  Based on this piece though, the former effect was negligible-to-unimportant and the latter?  Well, there was less money everywhere for a while, so that says little about "deglobalization" and simply says it was a financial crisis on a global scale (Boo hoo!  No repeal of the biz cycle!  Topple capitalism!).

Read it and weep:

The world may be staggering through its worst economy in 70 years, but international migration, an ever-growing force, shows few signs of retreat.

Globally, the number of migrants appears undiminished, and last year they sent home more money than forecasters expected. Many migrants did lose jobs, but few decided to return home, even when others offered to pay.

In some places, demand for foreign labor grew.

From the Arizona Statehouse to Calabria, critics warn that porous borders hurt native workers, threaten local cultures and increase crime. But even a downturn of rare magnitude did less than expected to slow the flows, revealing instead the persistent forces that keep migrants venturing abroad.

Perhaps no place shows the lure of migration as much as the Philippines, a nation of nearly 100 million people, where a quarter of the labor force works overseas. Despite the world’s sagging economy, the country set records last year for the number of workers sent abroad and the sums they returned.

“We hardly felt it — the global financial crisis,” said Marianito D. Roque, the labor secretary, who has been promoting the virtues of Filipino workers from Alberta to Abu Dhabi.

On every corner of this jeepney-jammed capital, someone seems to be coming from or going to a job overseas. At the Magsaysay Training Center, beside Manila Bay, college graduates scrub replicas of cruise ship cabins, hoping for housekeeping jobs that can pay four times the local wage. A park across the street doubles as a sailors’ bazaar, a reminder that the Philippines supplies at least a fifth of the world’s seafarers.

In government seminars a mile away, throngs of outbound maids learn to greet future bosses in Arabic, Italian and Cantonese. Some cry through a film about a nanny who wins an overseas job but loses the love of her children.

Doctors go abroad to work as nurses. Teachers go to work as maids. Would-be migrants set off sparks at the Tesda Women’s Center, where the government offers free training to female welders.

Naturally, the Philippines still provide large numbers of poster boys and girls for the whole "people flow" from PNM.

The financial crisis follows an age of growing mobility that has scattered migrant workers across the globe. Polish nannies raise Irish children and Indians build towers in Dubai. Of 15 million American jobs created in the decade before the bust, nearly 60 percent were filled by the foreign born, according to a report by the Organization for Economic Cooperation and Development. To be sure, the crisis has hurt migrants, often disproportionately. A report by the Migration Policy Institute found that in the past three years, joblessness grew by 4.7 percentage points among native-born Americans, while rising 9.1 points among immigrants from Mexico and Central America.

Anti-immigrant feeling in some places has swelled, at times to the point of violence. South African riots in 2008 killed dozens of African migrants, including many Zimbabweans. In Italy, attacks on African farm workers this year brought condemnation from the pope.

But with few exceptions, the hard times have not sent migrants home. Spain, Japan and the Czech Republic tried to pay foreign workers to go, but found few takers. Likewise, the number of Mexicans leaving the United States has not grown, said Jeffrey S. Passel of the Pew Hispanic Center. While the economy and tightened borders have reduced new arrivals, he said, the total population of Mexican migrants remains unchanged.

Hania Zlotnik, director of the United Nations Population Division, said, “Worldwide, the crisis has slowed the growth of migration, but the number of migrants is still increasing.”

That's it:  the crisis slowed the GROWTH of migrant workers, but did not stall it or reverse it WHATSOEVER.

CAN YOU FEEL IT!!!!!

The key for resiliency in the face of crisis is an old one:  keep your network wide.

While remittances to Mexico took an outsize hit (16 percent over two years), the Philippines offers a contrasting model of overseas work.

Mexicans are closely tied to one place (the United States), and one industry (construction). Filipinos work across the globe in dozens of occupations. Mexican migration is unmanaged and mostly illegal. Filipino workers are promoted by the state, and most go with contracts and visas.

The key lesson:  when you know the vision is on target, don't join in the freakout that naturally comes with any crisis.

Smart Haass piece on the Koreas crisis

"Smart Haass" has a nice ring to it, yes?

WSJ op-ed by Richard Haass, president of the Council on Foreign Relations and holder of the George Kennan slot at State under Bush-Cheney (early, not late).

Call out text summarizes it perfectly:

Pass the South Korea free trade agreement and give up negotiating with Kim Jong Il.

The FTA has been sitting with Congress for 3 years.  Instead of passing some meaningless message, why not pass that instead?

(Feel free to slap your own forehead and utter, "Duh!")

Other than that, skip the usual diplo show with nutty Kim and signal that you're just waiting for his death to screw the place over as much as possible.

Okay, I spiced up that last bit.

Reason why?  Make it clear to China that when the event goes down, we'll just watch while things get dicey for them as much or more than they do for Seoul.

Meanwhile, we should publicly explore the reality of a unified Korea with our southern friends, says Haass, and let China come to that conversation as it sees fear--I mean, fit.

May have spiced up that last-last bit a bit too.

A familiar rule-set gap: the tech races ahead, but worker safety does not

NYT story, coming to a court near you.  Pic is David Michaels, director OSHA, which everybody despises until it's your ass on the production line.

Naturally, the leading edge is a risky place to work, starts the piece.

You work with dangerous stuff, and maybe it costs you--literally--an arm and both legs when the meningococcal bacteria infects you, as happened to a New Zealand lab worker.  

The small quiet suits by workers have already arrived, like a $1.4M win for a former Pfizer worker.  The bigger class-action types will inevitably follow.

Michaels says, in effect, that "his agency's 20-century rules have not yet caught up with the 21st-cnetury biotech industry."

No kidding.  Same is true for US foreign policy on biowarfare, as our leaders instead prefer to obsess over the oh-so-20th-century "N" in the NBC (nuke, bio, chem) trilogy, which, in historical terms is really CNB (chemistry in the 19th C, nuclear in the 20th C--both producing weapons that debut in two world wars, and then biology in the 21st).  

Have no fear, the tragedies are coming.  Every good law on the American books had some nasty real-world tragedy as precursor. This will be no different.

Rule-set gaps, it's "what's for dinner?" in political terms.