Twofish's Blog

May 28, 2008


Filed under: china — twofish @ 4:56 am

I’ve been quiet about the earthquake in Sichuan.  In part because it’s been extremely exhausting to watch what is coming out, and in part that I’ve found that it’s a good idea to be relatively quiet when people are undergoing a lot of emotional trauma.  When people are in a great deal of pain, they can lash out very angrily if you happen to say the wrong thing, so I’ve found it is best to just keep quiet and listen.  Even listening to someone in pain can be extremely difficult and exhausting.

I do have a lot of thoughts on what is going on, but I don’t think it would be particularly useful for me to share them right now.  Maybe in a few months.  Part of it is that I’m just a bit too tired right now to get into a political argument.  Maybe later.

Part of the difficulty in seeing someone in a great deal of pain is that it reminds me a bit more that I’d like about things in my own past.  One truism about extreme trauma is that you never really recover from it.  You just cope and manage to get through the day.  One day follows then next, and then years pass, and you are wounded but functioning a bit better, and then something bad happens to someone else, and you are reminded of things that you’d rather not be reminded about.

It never goes away.

May 12, 2008

Why bureaucracies win….

Filed under: china, politics — twofish @ 5:27 am

Being an “angry youth” at a demonstration is quite an experience.  You are full of youthful energy and idealism uncorrupted by real world experience.  You think you are going to change the world, and sometimes you just might.

The problem with passion and energy is that it quickly burns itself out.  After a month of demonstrations, you just want to get some sleep since changing the world is just plain exhausting.  At this point the bureaucracies start to win, because bureaucracies are slow, plodding, and boring, but they don’t get tired.  In a bureaucracy, you come in, you write reports, you file papers, and then you leave.  This is why bureaucracies are so effective.  They don’t get tired because they don’t get emotional.

To quote the fictional Star Trek character Khan Noonien Singh

“Improve a mechanical device and you may double productivity. But improve man, you gain a thousandfold.”

What Singh misses is that if you improve the relationships between people who can improve productivity a million-fold or destroy it all together.  There is a story about Lu Xun in which he was studying to be a doctor and then saw a film in which Japanese solidiers were executing Chinese, and then became a writer because what was the point in saving lives as a doctor if you could save thousands as a writer.  That sort of enters my thinking which is why I’ve ended up spending a great deal of time studying bureaucracies and being a bureaucrat myself.  The worst serial killers in the world can kill dozens of people by themselves, but put one in charge of a bureaucracy and tens of millions of people die.  But it works in reverse, a doctor can maybe save hundreds of lives, but an efficient healthcare bureaucracy can save tens of millions.

Great articles on Tibet

Filed under: china, dalai lama, tibet — twofish @ 5:10 am

The great thing about the internet is that you can find in-depth, thoughtful articles that tell you thing that you didn’t know before. The bad thing is that you have to go through a lot of trouble to find them. Anyway here are two articles.

Trying to understand what is going on is like putting together pieces of the puzzle. The reason I like these two articles is that they “fit” into pieces of the puzzles that I already know about. I don’t know that much about Tibetan exile politics, however I do have first hand knowledge of Han Chinese exile politics, and what it’s like on in the inside of a Buddhist temple. I’ve also met people from the National Endowment for Democracy (and been highly unimpressed). A few comments:

  • happy people do not become Buddhist monks or nuns. People who are content with their life and satisfied with their material standard of living, just don’t become Buddhist monks. People who do become Buddhist monks and nuns tend to do so because of some huge trauma. I’m guessing that as a result Tibetan monasteries are filled with angry young youths.
  • I’ve also seen how devoted people can be to their Lamas. I’m pretty sure that any efforts by the Tibetan regional government to try to reduce the connections between monasteries and the high Lamas are going have a rather bad counterreaction.
  • Finally, one of the interesting parallels is between religion and language. I’m pretty sure that in a generation or two, most of the Tibetan exiles in India would have melted into the general population, but religion is one area were you can keep a culture alive. The reason this matters to me is that one reason I’m trying to make sure that my kids are Buddhist is so that they maintain knowledge of Chinese growing up in the United States, so naturally I’m sympathetic to a Tibetan parent who is trying to keep their kids interested in Buddhism so that they keep the culture in either China or India. One group of people that I’ve studied where this has been successful are the Amish, who have managed to keep alive Pennsylvania Dutch since this the language they use to separate themselves from the outside world, which they call “English.”
  • I’m also fascinated with “priesthoods” and the point that you just don’t become a high lama by reading books makes sense to me. The reason why is that physicists form a “priesthood” and you have the same sort of dynamics among scientists and mathematicians that you have among high lamas. When you get a Ph.D., you don’t merely learn a skill, you become in a very real sense part of a “priesthood.”

One piece of the puzzle that I’m missing is interviews with people from within the Tibetan regional government. Particularly ethnic Tibetan officials. There are two assumptions that people seem to be making with regard to Tibet. One is that the ethnic Tibetan officials in Tibet are “puppets” of the central government, and second that the anti-Dalai Lama impulse is coming from Beijing. Based on similar situations, I suspect that the actual reality might be much more complex. One thing that was the case with Soviet officials is that it turned out that the regional officials actually did have quite a bit of power, and second that non-Russian officials in the Soviet Union tended to try to be “redder than red” and “more Russian than Russians.”  This also seems to be the case with African-American Republicans, and looking at Tibet, I wouldn’t be surprised to see a “Clarence Thomas effect” among ethnic Tibetan officials in the Communist Party. Again, this is all guesswork, but part of the purpose of making up these hypothesis is so that you can see where your preconceptions are wrong if you do manage to get some new hard evidence.

One other thing to point out that people have missed. There is this idea that Chinese have been brainwashed by the Communist Party and those outpouring of nationalism is an example of people mindlessly repeating government propaganda. The trouble with this explanation is that I haven’t really seen any Han Chinese who hate the Dalai Lama and think that he really is this evil demon that the People’s Daily makes him out to be. The hatred and anger has been directed at the Western media (particularly CNN), the anti-Olympic demonstrations, but not so much at the Dalai Lama. The worst thing that I’ve heard anyone say about the Dalai Lama is that he is a puppet of American intelligence agencies, but even there, the anger is directed at the CIA.

Also, you have to approach politics with a sense of humor and irony if you aren’t going to go insane. One thing that amused me when I read the article on Tibetan exiles was the degree to which the monasteries in India have been funded by overseas Chinese. This is funny to me, since I’ve given not a small amount of money to Buddhist charities, and I’m amused by the thought that I may have given more help and money to the Tibetan independence struggle than the CIA has.

A one paragraph summary of the Bush administration

Filed under: china, politics — twofish @ 4:30 am

Part of the grand bargain that happened in 2004-2007 was mainly not to overturn agreements and understandings that had been made earlier. In the 1940’s, Roosevelt came to some understandings with King Saud and Chiang Kai-Shek. In the 1970’s, Nixon and Kissinger came to some understandings with OPEC and Chou En-Lai. Bush the younger came in with a domestic and foreign policy agenda that involved revolutionary change. He wanted to vastly reduce the size of the US Federal government while at the same time making the world safe for democracy which would have involved eventually overthrowing the House of Saud and the Chinese Communist Party and replacing them with liberal democracies. Iraq was merely the first step in the global march of freedom. The trouble was that what they were doing made no economic sense, but the people making these plans weren’t listening to anyone with any economic sense. By 2005, it became pretty obvious that all of these massive plans were coming to nothing, and at that point the Bush administration changed their policies to go back to the understandings that had been reached in the 1970’s.

May 1, 2008

Notes on the China Investment Corporation

Filed under: china — Tags: , — twofish @ 2:46 am

HZ: The pension funds/social security funds should instead be required to hold a percentage of their assets in foreign assets and be required to only invest through broadly diversified index.

The problem is that once you get over $30 billion in assets index investing no longer works, since you just have too much cash, and you’ll move the index against you. The other problem is which index, and who decides what stocks are in your index? Whoever decides what is in the index has become your fund manager.

HZ: CIC, on the other hand, should be strategic investors not financial investors.

China only allocated fraction of its foreign exchange reserves to CIC, and can easily start another investment fund if CIC is successful. The reason that China started with CIC first is several-fold:

1) it’s a pressing need. Shanghai had just had a major scandal in which city pension money was pilfered and everyone knows that the PRC pension system is broke. Hu Jintao came to office on a “Great Society” platform so fixing the pension system is very high on their priority list,

2) there are lots of people in the world that you can hire to manage a pension fund. There aren’t that many people who you can hire off the street to manage a national strategic investment fund.

3) If you have a pension fund, the people that you hire to manage the fund don’t have to be Chinese, and there are good reasons to hire lots of non-Chinese. In you have a fund whose goal is strategic investment to advance Chinese national security interests, then the people you hire pretty much have to be Chinese, and that means that you can’t tap into global expertise, and you run into local political issues.

4) the goals of managing a pension fund are pretty clear (keep old people from rioting), and so you have more investment discipline and fewer bureaucratic battles

HZ: What CIC could do is to provide a transparent lower rate and stable debt financing to companies engaged in agriculture, mining and energy industries. As only a debt investor, it would disavow of control of where the end products should go.

That’s actually what China Development Bank was supposed to do, but CDB hates this job because by having low interest loans, CDB doesn’t make any money and gets saddled with bad loans it doesn’t want. I wouldn’t be surprised if in the next five years, the PRC forms a development bank which combines the Agricultural Development Bank and some other institutions. However, that will involve looking over CIC’s track record and it’s mistakes.

One step at a time…

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