Wikistrat report on "democratic peace theory" simulation

This report, compiled by Dr. Thomas P.M. Barnett, Wikistrat's Chief Analyst, presents the top insights from Wikistrat's latest simulation. The simulation featured over 90 experts from around the world.

Immanuel Kant’s theory of a democratic peace imagines a world without war and—as a precondition—without dictators. In contrast to the Hobbesian requirement of a dominant, system-taming Leviathan, Kant’s vision relied on the self-restraint of societies that rule themselves. In humanity’s historical journey from Thomas Hobbes’ realism to Kant’s idealism, historians have noted that mature democracies fight with one another far less frequently than authoritarian governments fight with other states but that immature democracies tend to be the most warlike of all.

Stipulating that historical record, the massively multiplayer online consultancy Wikistrat recently conducted a week long crowd-sourced brainstorming exercise to plot out a plausible range of caveats to the conventional wisdom that is the democratic peace theory. In this summary, we propose six categories of conflict dynamics that can elicit democracy-on-democracy war—to include pluralistic systems both mature and immature/transitional . . .

Go here for this de facto executive summary.

China comes back to even in its trade with the world!?!

Economist story: "for the first time since 1998 more money leaves China than enters it."

On the surface, you say, "balanced trade!" when what you should really say is "balanced investment!"  But even there you'd be missing the subtext, so sayeth The Economist:

MAINLAND China can now boast over 1m wealthy citizens (qianwan fuweng) each with over 10m yuan ($1.6m), says the latest edition of the “Hurun Report”, which keeps track of China’s capitalist high-roaders. But the mainland seems to be having trouble keeping them. According to the report, published on July 31st, more than 16% of China’s rich have already emigrated, or handed in immigration papers for another country, while 44% intend to do so soon. Over 85% are planning to send their children abroad for their education, and one-third own assets overseas.

The affluent 1m have profited handsomely from China’s economic boom. But only 28% of those asked expressed great confidence in the prospects over the next two years, down from 54% in last year’s report.

Them's some stunning numbers:  60% of the rich plan to emmigrate and 85% are sending their kids abroad - thus perpetuating the attraction of leaving the Mainland.

Frankly, those are numbers and dynamics one associates with post-Cold War Russia or Africa of the past several decades.  There is a looting quality to this circumstance, driven primarily by the sense that China is becoming a dangerous place to have wealth.

Now, we can all get jacked with the dominant populist vibe (check out the "Dark Knight Rises"), but it's a very negative sign when your rising economy's rich people don't want to stick around.  For China it says, we don't trust the - now longstanding - reforms will stay in place.  It also says, we want to go where our wealth translates into genuine political power (rich people are like that).

True political pluralism usually arises when the rich realize that the only way they can keep their wealth is to open up the system for a stabilizing middle class to take the reins of political power. No, they don't enjoy the process, but it beats the alternative - revolution typically from the lower classes.

This dynamic is presenting itself across much of the developing world right now: we see the rise of a truly global middle class and - big surprise - amidst all that wealth creation a super-rich emerges (happens every time), thus the richest-to-poorest delta is fantastically large.  That's when you get nasty populism that, by and large, can either be deflated nicely by a long progressive period of cleaning up the system, environment, politics, etc., or can explode into something far more destructive.  

Europe got that initial middle class about the same time America did, and Europe came up with two scary alternatives:  Bolshevism to prevent that dastardly bourgeoisie from emerging, and fascism, which pretended to protect those "shopkeepers" from radicalized workers but really was about keeping the rich safe and everybody else wound up by freakish nationalism and militarism.

America split the difference brilliantly, plowed through a lengthy progressive era, and centered its political system - along with its economy - on a stable middle class.

We are rerunning that Western experiment now on a global scale, with the biggest democratization process to come being - obviously - China, which faces the daunting task of democratizing amidst a progressivist dynamic (like virtually everything China does, it's a combination that's unusual in its "cramming it in" ambition, but there you have it).  Meanwhile, the West is coming to grips with two stunning problems:  it no longer can manage a blue-collar middle class status and hasn't adjusted its educational system from its industrial era origins, and it's facing a demographic aging wave (less so the US) that forces it to revamp its industrial age pension and healthcare systems rather drastically.

The progressive age that must inevitably unfold globally so as to tame globalization's natural excesses (in this period of rapid expansion) is the most important challenge humanity faces in the next several decades.  Truth be told, global warming will by and large have to await that process before being truly addressed on a systematic level (even as much progress should occur thanks to the fracking revolution and its triggering of widescale movement "down" the hydrocarbon chain).

But back to the point of the piece:  China's movement toward accepting a progressive era is crucial to initiating this process on a global scale, because a China that moves down this path will be less frightening to an America that is currently using the excuse of "scary" China to delay its own internal reforms (the AirSea Battle Concept being just one telling symptom of a general political escapism).

And this is where I go back and forth in my fears and hopes for China.  Whenever I'm there I meet so many in the elite who are acutely aware of all this and realize the global responsibility China's internal development represents.  But then I also meet plenty who can't rise above their own fears for their own status.  So no, this battle is not decisively waged in either direction, even as I take great solace in the whole Bo Xilai Affair and its diminishment of the brain-dead Red revivalism in the interior.

Interesting times ...

Chart of the Day: North Korean mobiles

Kim Jong-Eun is presenting himself in the guise of his grandfather, discounting the military and presenting a "great father of the natio" motif.

Now, with one million-plus phones, and all those portable cameras, the place opens up considerably.

My projection:  KJE is going to try and reform the place in the Chinese way and thinks he can handle the process.

My hope: it spirals out of control in a Gorby manner.

Whatever the mid-term outcome, nice signs and good progress in all of this. I honestly believe that DPRK is off the danger radar in five years.

That way, we can all get jacked about arresting fishermen in the South China Sea, pretending it serves as prelude to a high-tech war with China.

Great "Bottom of the Pyramid" logic

WSJ story on multinationals finding steady profit in marketing to the poor, who offer a "relatively stable demand":

Analysts have long argued that companies selling products and services to people earning less than $4 a day can outperform in tough times.  This is because consumers still must buy food, soap and other basic goods when the economy is bad, even as middle-class buyers cut back on discretionary items like fashion or gadgets.  Companies selling everything from cheese to diapers to frozen fish ahve discovered in Indonesia that they can turbocharge growth and add more stability to sales during slowdowns by offering small package sizes that are more affordable for the poor who have limited spending money on any given day.

One nit:  "Analysts have [not] long argued ..."

That was C.K. Prahalad's Bottom of the Pyramid logic that was first opposed, then ridiculed and now gets passed off as the conventional wisdom of the analysts.

Simplistic point, but smart people can make a lot of money off such simple stuff.

The generational shift emerging in Chinese society

Nifty FT piece on the emerging post-Tiananmen generation - or anyone too young to remember that. Here they're talking only up to 24 years old, but in truth, you could easily go as high as 30-32, because people don't come of age on political matters til around 13 at the earliest.

As it is (rough eye-balling here), you think the under-25 crowd in China is close to 1/3rd of the population.

Piece argues that recent enviro demonstration "exposed a new vein of activism" among this crowd.

You know the old bit (repeated by me) where Chinese activists said, "Before Tiananmen, we thought freedom was 90% political and 10% economic.  After Tiananmen, we decided that freedom was 90% economic and 10% political."

When I first heard that bit, I loved it immediately as a basic expression of the lesson that virtually all revolutionary generations learn throughout history:  it's easier to revolutionize the environment through technology and commerce than through politics (which, in Marxian fashion, reflect those deep underlying realities).  So what I'm saying here is that most revolutionary generations learn that it's smarter to inexorably reshape the base than attempt to smash - one afternoon - the superstructure.

Why environmentalism is such a signpost of change: it's the political issue that translates so clearly to economic progress, because it defines the point where people look up from their economic successes and start asking the tradeoff questions. Yes, labor wages tend to precede as an issue, but that's such an intra-business issue (especially in a place like China where you're talking foreign owners). Environmentalism, in contrast, is undeniably local - even intimate (your bodies and what you put in them).

Overall, a great piece worth reading.  The "post-90" generation is starting to graduate from college and displaying a keen interest in politics.  With a tougher economy awaiting them, the instinct to seek better answers will be strong - along with the communication capacity for self-organization (see the unsurprising youth skew on "netizens").

No, I don't see some fast wave a'coming.  I see about a two-decade struggle where the government and Party consistently yield ground because it's the best choice for continued growth accompanied by political stability.

One Kindle per child

Interesting WSJ piece on how aid projects are working to spread Kindles around Africa much in the same manner as the recent "one laptop per child."  Many of the same problems, many of the same good intentions, but a number of deltas worth mentioning.

The laptop per kid thing always struck me as overkill amidst a cellphone revolution.  The problem I still have with cellphones is one of their great tricks: you can be illiterate and use one quite well - thus the cellphone's reputation (deserved) as the greatest economic development tool of all time.  If you could read, my God the things you could suddenly do!  And if you couldn't, my God the things you could suddenly do anyway!

But just as a lot of people worry about the poor literacy of young people in developed societies - thanks to all these devices, I worried about the same in developing.  The writing skills of Millennials is - by generational standards - simply awful.  That's why I encourage so much reading and - more importantly - writing among my kids (all of which I personally edit whenever they give me the chance, so I can impart the same basic lessons my sister Cathie gave to me when she edited all my papers in college before I turned them in).  Good writing is becoming a lost art, and good writing starts with good reading of good writers - followed by application.

That's why this article caught my eye.  I still learn a lot about writing all the time - and always will, because I still read a lot (more and more fiction).  My fear with one-laptop was that we'd short-circuit a lot of useful learning, but with Kindles, which give you access to endless books and can go for a week on a good charge, you're filling young people's time and space with material that will ultimately advance them by developing their minds. 

Plus, as the article points out, with built-in Internet, Kindles are basically big mobiles, and everyone knows where those technologies can take people in otherwise "hostile infrastructure" environments.

Having just turned 50 and thinking about what I want to do with the next five-decade tranche, I do find myself drawn to efforts that will have catalytic impact in developing/emerging economies.  I have spent a great deal of my life fretting over the have/have-not thing, which is why - as a young man - I fell in love with globalization and its capacity to fuel the "Great Convergence" that progressively heals the Great Divergence of 1800-2000 (in income globally).

No, I don't see myself in aid efforts per se (although I have grand hopes for a philanthropic career at some point), but rather in the sort of infrastructure breakthroughs (still in that Development-in-a-Box mode) that are supremely catalytic.  There's just so much to work with right now, what with all the South-South transactions taking off.

I honestly cannot understand anyone pining for a past age.  We live in the best of worlds any human has yet enjoyed.  The problems we face are the best we've ever had, and there are so many good tracks of human progress to pursue.

I feel lucky to be 50 right now - at this point in time.

An accurate if overwrought description of the Chinese economy

Wang v. Bo - preview of coming clashes!Got it via a friend who read Krugman's post on this post. Here's the Krugman's site, and here's the original post.

Hempton's description is correct, by everything I know.  He's just a bit much on the name calling ("China is a kleptocracy of a scale never seen before in human history.")  Krugman reads the post and sees, per his usual pessimism, a system bound to implode.

What Hempton describes is a form of capital expropriation of the Asian variety.  It is different in style than what happened in the West (super-low wages) because it focuses on abusing the average Chinese citizens' savings to prop up state-run enterprises while allowing the elite to siphon off extraordinary profits. But understand that Japan and South Korea did much the same, so yeah, the scale is magnificent but the dynamic is familar.

The system is right for China in terms of preventing instability and allowing for an overall rise in GDP per capita that generates a massive middle class (in sheer numbers, less so as a percentage of total population).  It'll be right until the people can't stand it anymore (populist anger) or the global economy can't stand it anymore (the export-driven growth and general mercantilism) or the national economy can't stand it anymore (the heavy reliance on public investment).

Now, Hempton's take is all righteousness to point of sounding like a Marxist, which is correct enough and ironic enough, but, you know, Marx was right on a lot of things.  He just couldn't imagine a political system smart enough and flexible enough to bend at the point of near-breaking.  In the West, he didn't believe democracies could pull it off - except they did.

Now, we Westerners can't image single-party states in the East managing the same.  Except Japan did actually move off the model - to a certain extent.  South Korea has done it much better.  China approaches the historical moment when it must happen; when it must turn into a system ruled by the middle.  

Will it become a recognizable democracy?  So many experts will tell you that cannot happen due to Asian civilization.  I personally find that bullshit and always have.  It won't resemble Western democracy but it will define - just like Japan and South Korea have - Eastern democracy (and yes, that concept makes some experts' heads burst into flames once they scream, "INCONCEIVABLE!").  

Here again, I think Marx is right in saying that capitalism is so revolutionary that it remakes societies.  It just does at the pace of generational change - duh!

China's system works in expanding capitalism throughout China and creating tremendous (and real) growth and in networking China with the global economy.  It works just like America's system of global governance through the absorption of export-driven growth and debt-financing-as-a-reserve-currency and providing (with all that cheap money) military Leviathan services worked for expanding globalization for about 25 years in the long expansion from the early 1980s through the late 2000s.  It works until it works itself into an imbalance that requires correction and new rules and new policies, etc.  It works until it succeeds too much and thus stops working - simple as that.

What always happens when a system like either of those reaches its apogee of success and no more success can be had is that the critics come out in droves and go ape-shit in their condemnations.  Suddenly, not only is the created imbalance bad, but the entire system is evil and all that came through it is viewed as a complete fraud.

This is way over-the-top analysis and Hempton's piece is chock full of it.  But it's this kind of Cassandra crying that signals you're reaching the endpoint and system-failure-triggering-revolutionary-solutions is nearing.

So yeah, an accurate description, and yeah, way over-the-top in its gloom-and-doomism.  

Why have the Chinese people allowed this system to unfold and expand and reach such imbalance?  Because it's delivered the country and a great deal of them a far improved life - simple as that.  

Why will the Chinese people progressively rebel against the system now and in the future?  Because it's reached the point where it stops working as well as it did in the past - in large part because China hits the same shift point between extensive and intensive growth that all risers hit - again, simple as that.

Yes, we can call it all sorts of names and point fingers, and pull our hair, and predict all manner of doom.

But you know what?  China ain't going anywhere.  The system will adapt.  

No, it won't be pretty, but the Asian version of capitalism adapts just like the Western version did.  Eventually the rich find they have enough and want to protect their wealth through enhanced social stability - even more equality - if that's what it takes.  Eventually, the rank-and-file see that they've eaten enough bitterness on behalf of China so that they deserve a better cut.

If China hits the same roughly-five-decades-mark on single-party rule and then spasms toward democracy, like so many other Asian nations have in their individual "rises," then that democratizing point probably arrives in the 2020s (but between now and then, expect tons of apres moi, le deluge handwringing that will mentally prep the Chinese people for the coming change).  I am convinced China cannot make it past that point in history and wealth creation (by 2030, a per capita GDP of about $20,000) without going full democratic (always with some Asian/Chinese twists, mais oui).

But, as we know, China is doing everything so fast in comparison to Japan and South Korea and other predecessors.  But it's also far larger (which is why EVERYTHING in China is the "biggest in human history" - puhleaze!), meaning we can't forget the extensive growth still to come in the interior provinces, where well over a half-billion poor people live.

China's rich coast must integrate its still-impoverished/poorly developed interior just like the rich-and-rising American East integrated its Wild West from 1865 to about 1900. Those were wild and crazy years, full of booms and busts and robber barons galore.  But that mounting angry populism eventually segued into a progressive era of tremendous progress, one that cemented the middle class as the republic's political center.

To me, the most fascinating question out there (besides the Fracking Revolution in energy) is, How fast does China's democratization process arrive?  China still has to make that interior growth happen, but, because it lacks true democracy, it's got this restive coast.  Already, you see this dichotomy reflected in the Party between the coastal, cosmo "princelings" and the far-more-red interior hard-core types more rooted in the Party's past.  You also saw it in the dramatic showdown between Chongqing's Bo Xilai (with his Maoist revival) and Guangdong's Wang Yang. This is classic red state-v-blue state stuff!

So yeah, the big political fights (and accompanying democratization) are coming.  They'll just unfold within the Confucian mindset of the system, which will actually help a great deal in keeping this thing from exploding.

So yeah, China is deep into that journey of transformation that we've seen so many predecessing systems experience as "punishment" for their successful rises within capitalism.  That's why, in my mind, there's no question that between now and 2030, all the changes desired by the West and many Chinese will come to pass - albeit in a manner that is particularly Chinese.  So no, I do see the power of culture and civilization in the "how" part; I just don't think it prevents or obviates the "what" part.

So read Hempton's piece.  Read Krugman's blog.  Just understand that none of this is all that unprecedented.  It's just the latest chapter in capitalism's expansion. Yes, it's a crucial one alright.  You add China to the mix and you go from a "global economy" to globalization - pure and simple.  But China won't be the last story in this epic cycle.

So don't wear yourselves out on fear and hyperbole - as "SHOCKING!" and entertaining as these "discoveries" are.

There is no such thing as "Asian values," just pre-development ones

Really cool column by Patti Waldmeir on Asia (despite the weird lack of noun-verb agreement).  She is FT's Shanghai bureau chief.

Gist (well captured in title): "China's young workforce warm (sic) to west's work-life balance." [Online version of title cuts "workforce," so agreement works there.  Picky me, I know.]

Starts with recollection of asking founder of BYD battery/carmaker what he did in his free time.  He scoffed at the notion that such a thing existed, and then lectured her on why China would surpass the West because its people had no such conception.

True for the "rise"-initiating generation, but not true to the kids who follow:

But that was three years ago, and three years is a long time in China. Since then, the younger generation of Chinese workers have (sic) begun to discover the joys of sloth. Leisure - which has had a bad rap on the mainland - is making a comeback.

Why? Overwork, plus increasingly long commutes.

Upshot:  according to the head of GM in China, the post-80s generation is increasingly into the the whole life-work balance, creating all manner of HR challenges (none of them new to GM, please).

A headhunter says more and more of his applicants want to work at places that respect the weekend: "These overseas trends are coming into China now."

Of course, if you're trying to build up domestic consumption, you need to encourage this mindset.  Plus, in an economy that seeks to prioritize innovation, all work and no play make Jin a dull boy.

But the larger point, just explored in a great Master Narrative proposed by a Wikistrat analyst in our ongoing "China Hits the Great Wall" simulation, is that China may well confound us by getting to the point of wealth and then disappointing all the "realists" out there who imagine the country's only path to be maximizing "national power" (whatever that is). Especially when you factor in the rapid demographic aging, we are more likely to get a China that goes straight to a Nordic socialist-heavy, more admirable lifestyle package than mindlessly replicating the Kaiserian Germany push toward great-power war (crazy talk, I know, for a pol-mil analyst who wants to be taken "seriously" by Washington).

But there you have it: far faster than it appeared in Japan, we see the work-life balance monster rear its relaxed head.

WPR's The New Rules: India's Pastoral Ideal an Obstacle to Globalized Future

When most people think of revolutions, they imagine the overthrow of political orders. By contrast, most of what we see today in globalization’s continued expansion is not violent political revolution, but rather unsettling socio-economic revolution. Yes, when existing political orders cannot process that change -- and the angry populism that typically accompanies it -- they can most definitely fall. This is what we have seen in the Arab Spring to date. But more often this populism leads to political paralysis in countries both democratic and authoritarian. A case in point is the recent controversy in India over Prime Minister Manmohan Singh’s plan, since scrapped, to allow multinational retail chains like Wal-Mart, Carrefour and Tesco to mount joint ventures with local firms in direct retail sales operations. The public uproar showed that at times, globalization is simply too much change, too fast..

Read the entire column at World Politics Review.

Mr. Dalit Comes to Class

FT story on new Bollywood film depicting "untouchables" and the discrimination they suffer. The film is already banned in three Indian states out of fear of inciting social unrest.

Ask yourself, what period of US history does this remind you of?

Fair dynamic comparison, although here the pushback comes more from dalit politicians and those in favor of their rights.  Why? Film focuses on quota system for dalits/untouchables set up at time of independence. Upper castes say film makes them look bad, but dalits say film denigrates positive impact of quota system - aka, India's version of affirmative action. 

What I remember from visiting India: it seemed like the taller you were and lighter your skin, the more likely you were more powerful and thus from a higher class.  Conversely, lower caste people seemed shorter (poorer diet) and darker.  So when I mixed with elites, I looked them in the eye, but when I moved among ordinary people, I felt like a frickin' giant. The dichotomy rather stunned me.

If you mention that observation, you tend to get a strong response from Indians who find any comparison to racism in the West to be completely offbase. I'm not sure what you call it, but it strikes me as a deep legacy of discrimination based on birth (meaning you can't change who you are no matter what, which smacks of that "one drop of blood" logic) and thus is reasonably compared to racism elsewhere in the world, despite its "sophisticated" and multivariate application.

Point of post: rising India, like rising China, is racing through a lot of history and "phases" that US went through a much more leisurely pace.  That's incredibly hard but facinating to watch.

Blurb on film only hints at controversy (from Rotten Tomatoes), but understand that Prabhakar has a special space for dalits in his school and that Kumar, who is in love with Prabhakar's daughter, is himself a dalit. This is classic Bollywood (father-daughter conflict over undesirable match) with the twist that here the father is the perceived liberal:

Aarakshan is the story of Prabhakar Anand (Amitabh Bachchan), the legendary idealistic principal of a college that he has single-handedly turned into the state's best. It is the story of his loyal disciple, Deepak Kumar (Saif Ali Khan) who will do anything for his Sir. Of Deepak's love for Prabhakar's daughter, Poorbi (Deepika Padukone), of his friendship with Sushant (Prateik). It is the story of their love, their lively friendship, their zest for life, and of their dreams for the future. Centered on one of the most controversial issues of recent years, with the Supreme Court's order on reservation, the story suddenly becomes a rollercoaster ride of high drama, conflict, and rebellion, which tests their love and friendship for one another, and their loyalty to Prabhakar Anand.

Film is already in US, probably because Bachchan is the Cary Grant of Indian cinema. Done about 300k, so art-house limited.

Be interested if anyone has seen it and can provide impressions.

Chinese labor: the only way "up"

Economist story posted today.

The reality of moving on up:

WITH more than 1m workers, Foxconn may be China’s largest private employer. The secretive electronics giant is renowned for taking designs from Western firms, such as Apple, and using cheap labour to crank them out in huge quantities. But its fantastically successful business model seems to have run its course.

At a closed retreat in late July, Terry Gou, the chief executive of the Taiwanese-owned company (which is also known as Hon Hai), unveiled a plan to hire 1m robots by 2013. In a public statement, Foxconn talked about moving its human workers “higher up the value chain” and into sexy fields such as research. But at least some will surely lose their jobs.

FT said earlier (8/2) that workers' pay is expected to rise 20-30% a year!  It rose 30-40% last year.  That makes robots look a lot better. So did the worker suicides and labor unrest that set those pay raises in motion last year.

But here's the trickier point the Economist makes:  Foxconn isn't known for handling complex technology; it's known for throwing labor efficiently at assembly tasks, so plenty of risk there too.

All this is to say, as China ages demographically and seeks to move up that value chain, it'll get magnificently harder to make sufficient numbers of jobs appear every year.

There is no "miracle" in catching up to the West.  It's been done repeatedly by Asian economies.  The miracle comes in staying on top - much less vaulting ahead.

Yes, China will have a bigger aggregrate economy than the US at some point.  With four times the people this is only natural and desirable. But China will be saddled with a massive welfare state eventually, and this story explains some of the reasons why.  

Remember that:  This is not a new form of capitalism here - nor an improved one.  It's a recognized model for catching up that doesn't really have a clue about what to do once that's achieved - the damaged environment being hidden problem #1.

The rest is hype.

Chart of the Day: Good governments come with good income

WSJ story on academic study.  Gist of story is that China cannot really move into high-income without dramatically improving its government, but the converse logic also holds:  we shouldn't expect too much from governments until their society's per-capita income level gets up there.  Yes, there are exceptions in each (rich-enough Russia, rich-enough emirates), but the basic pattern is clear enough.

Why the lag?  It takes a demanding citizenry to get good governments, and citizens get more demanding, the more money they have.  It's really that simple.

At the end of the day, all things being equal, there's no question that democracies outperform autocracies. But the "all things being equal" part doesn't include the catch-up phase, like the one China is going through now. 

When does that "catch-up" end and the democratization kick in?  The people decide that, usually between $5,000-$10,000 per capita income.

Note that the numbers above are PPP, so high.  China measured less relativistically sits at about $4400.

WPR's The New Rules: Strategic Balancing vs. Global Development

The World Bank's 2011 World Development Report is out, and this year's version highlights the interplay between "conflict, security, and development." That's a welcome theme to someone who's spent the last decade describing how globalization's spreading connectivity and rules have rendered certain regions stable, while their absence has condemned others to perpetual strife. But although the growing international awareness of these crosscutting issues is long overdue, the report ultimately disappoints by focusing only on the available tools with which great powers might collaborate on these stubborn problems, while ignoring the motivations that prevent them from doing so. 

Read the entire column at World Politics Review.

Amidst the ugly piracy and the just plain bad censorship, there is the sheer good of numbers

FT full-page "analysis" and Economist story.

FT is about rise of microblog sites in China and how the government throws ever more censors at the problem. As always, it's a strange mix of shaping and monitoring public opinion on the government's part, but what always impresses me is the sheer amount of expression going on.

Naturally, the piece leads with the latest example of a netizen mob gone wild over some official's nastiness -- or more specifically, some high official's son's nastiness (the infamous son of Li Gang, who, after hitting a student with his car while drunk, drove off shouting from his car window, "Make a report if you dare, my dad is Li Gang!").  Well, the report was made and Li Gang paid the price.  "My dad is Li Gang" became the Chinese web equivalent of "I'm Spactacus!" symbolizing everything that the public finds wrong about official abuse. 

But as the piece makes clear, the evolution of China's web defies traditional Western expectations.  More and more Chinese log on, and more and more government effort is launched to keep track of it all.  Instead of some glorious montage scene where everybody expresses their clear desire for free elections and then we cut to the movie's uplifting climax, we see a lot of virulent nationalism being expressed.  And instead of hapless government censors throwing up their hands at the insane flow of words, the Party is getting fairly sophisticated at managing the whole mess, even publishing its annual list of Li-Gang-like events.  So, for now, the web just seems like another place where the Party is subtly polling the public, cracking down only in the those rare instances where somebody truly steps out of line.  

We in the West are disappointed with this, but I don't think we should be.  Expecting China to morph into the U.S. overnight is wrong, but so is assuming that the line between Party control and public expression isn't moving, because it is.  It's just that the public is happy enough, for now, exploring a lot of personal and mundane, simply entertaining stuff, not being all that different from anybody else in the West.

And when the political is expressed, it's often frighteningly out of control and over the top -- immature.  That too is not all that different from the West, if you go back to an equivalent time in our political evolution.

And that's the trick.  Rapid modernization can speed up all sorts of evolutions, but a rapid modernization of the political system is something entirely different.  Those sorts of rules, when they change abruptly, can be very destabilizing, and the more you let the connectivity revolutionize everything else in the economy and society, the more you, the leadership and even the public, should fear commensurate possibilities of change in the political sphere. 

We can assume that everything would work out to our liking if the Party just let it all hang out at once, but we'd likely be wrong.  People need time to get used to all that change, and we consistently underestimate the amount of time traveling that the average 50-something Chinese has undergone over the past three decades. We took a couple centuries to travel similar political ground, and we forget the journey, so we say, "All right already, you've had the web now for a while, so why doesn't everything resemble our way of life?"

I say, be patient and give them time to get used to the all the economic and social change before moving on to the political.  And then expect that journey to likewise be entirely Chinese, understanding that how they kept things together over time has never been our way, because our way was to escape all that back home, run here, and build something entirely different. 

Over time, the Party commands less and less of the public's attention, and for this thing to evolve in a more free direction, that's all we need. 

The Economist story makes this point.  Not only is the government's main channel, CCTV, losing viewers to less controlled provincial stations, it's really losing the young to Internet video, most of which is pirated immediately from the West.  Interesting example of a show I know and love: "Prison Break" is huge in China and its star, Wentworth Miller is not only mobbed everywhere he goes in China, he's the frickin' face of GM on TV commercials!

The show has never been aired on any Chinese TV network.

Now, the temptation is to read meaning into Wentworth's original TV subject matter, but go easy on that.  Point is, the young get used to choosing on their own and, over time, that changes things.

So, go easy on the pessimism, I say.  We expect too much out of the original, time-traveling generations here.  Xi Jinping (China's next president and in his late 50s), for example, still remembers vividly being thrown in jail as a kid as a political prisoner on his dad's behalf during the Cultural Revolution.  He's China's leader for the next decade, and his "Sixties' were a bit different from the Boomers.  

Conservatives in the West keep saying, Nixon went to China 40 years ago and look how the Party still rules! They say that because that's all they want to see.  But we need to go back and read our history here.  The Cultural Revolution was a "long national nightmare" that trumps our Vietnam and Watergate by . . .  more than just a bit.  It was a national insanity and the bite it took out of the national psyche was closer to our Civil War than anything we've experienced since

So rather than expecting that much more time traveling by the 50-something crowd, think of this more in terms of post-Cultural Revolution generations.  The first truly post-CR leadership generation comes online in 2022 and China hits the half-century-mark post Deng's reforms another decade after that.  Realistically, this is always where I've been positing this sort of political change -- when the bulk of China's population has had all its formative experiences post the Cultural Revolution, or when their definition of normal truly normalizes, and their willingness to start some of the political time-traveling builds to the point of acting on those impulses. 

For now and for a while, China's population will remain mostly filled up by people for whom all the change to date is more than enough for them.  We can be disappointed in that most human of realities, or we can just be happy for them and all the changes they've been able to enjoy in their collective lives to date.

WPR's The New Rules: The Two Chinas' Long Road to Common Ground

The Nobel Committee's decision to award jailed Chinese democracy activist Liu Xiaobo the 2010 Peace Prize came just days before China's Communist Party elite anointed political princeling Xi Jinping as President Hu Jintao's clear successor, highlighting the two Chinas that now seem to be passing one another like ships in the night. One China is propelled from below by a coastal workforce that is increasingly self-confident in its skills and accomplishments and growing income. The other, larger China is managed from above by political leaders who increasingly worry over the nation's social stability as they grow more self-defensive in their ruling style. 

Read the entire column at World Politics Review.

Going on BBC World Service's "World Have Your Say" radio broadcast today at 1pm EST

Subject is Nobel Peace Prize being awarded to Liu Xiaobo and the West's growing fear of China in general.

Go here to listen live.

The podcast can later be found here.

WPR's The New Rules: Building Real States to Empower the Bottom Billion

America's top African diplomat recently signaled Washington's desire to establish more official contacts with the autonomous region of Somaliland, which sits within the internationally recognized borders of the failed state known as Somalia. Meanwhile, both our Agency for International Development and the Pentagon's recently established Africa Command worry about Sudan's upcoming vote on formally splitting the country in two. For a country that has sworn off nation-building, it's interesting to see just how hard it is for America to remain on the sidelines while globalization remaps so much of the developing world.

Read the entire column at World Politics Review.

Explaining China's growing reliance on national flagship companies

NYT story by Michael Wines notes World Bank data saying the China's state sector, after years of declining share of the national economy, is starting to edge back up:

During its decades of rapid growth, China thrived by allowing once-suppressed private entrepreneurs to prosper, often at the expense of the old, inefficient state sector of the economy.

Now, whether in the coal-rich regions of Shanxi Province, the steel mills of the northern industrial heartland, or the airlines flying overhead, it is often China’s state-run companies that are on the march.

As the Chinese government has grown richer — and more worried about sustaining its high-octane growth — it has pumped public money into companies that it expects to upgrade the industrial base and employ more people. The beneficiaries are state-owned interests that many analysts had assumed would gradually wither away in the face of private-sector competition.

New data from the World Bank show that the proportion of industrial production by companies controlled by the Chinese state edged up last year, checking a slow but seemingly inevitable eclipse. Moreover, investment by state-controlled companies skyrocketed, driven by hundreds of billions of dollars of government spending and state bank lending to combat the global financial crisis.

Besides the obvious explanation of the huge stimulus package, I would cite three other key trends:

1) the push to jump-start industrial development of the second-tier cities;

2) Beijing's fears about access to raw materials means it's pushing national companies to lock-in a lot of assets while it has the bank account to do so; and 

3) the shift to trying to rely more on domestic demand has incentivized Beijing to champion national flagship companies (however "red" their affiliation) at home so as to be able to dominate expanding market spaces.

These are all great temptations and normal strategies for this point in China's developmental trajectory.  Will they overcome the general trend toward more reliance on markets?  Perhaps for a while but then these strategies will contribute to an overall stagnation of growth simply because they favor the inefficient over the more efficient.

But here the thing to remember:  most development paths consist of two steps forward and one step back. Linear projections are always wrong.

Chart of the Day: Year(s) of the (energy) pig

Pretty easy to hit high growth numbers if you're tossing everything into the boiler.  This is extensive growth defined:  anything that burns is considered fuel.

CCP opens complaint line

FT and WSJ stories on new online bulletin board where ordinary Chinese can leave messages to senior party leaders--at some personal risk, of course.

A good sign, of course, but mostly a defensive one:

 . . . the internet has diluted the state media's traditional information monopoly.  Corruption, abuse of power and the other ills of one-party rule are now being revealed online every day.

So yeah, an exercise in PR, but one that reveals the party's largely reactive mode and demonstrates their fear of popular unrest--and that alone represents a certain responsiveness to the public.