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  • Archive for the 'China' Category

    Perception and…

    Posted by David Foster on 14th July 2019 (All posts by )

    Culture?  Language?  Genetics?

    Alison Gopnik, writing in the WSJ, discusses an interesting experiment on problem solving in very young children which was run by two researchers at UC San Diego, following on to research in which Gopnik was herself involved.  Children of various ages were shown a machine that lights up when you put a block of a certain color or shape on it.  “Even toddlers can easily figure out that a green block makes the machine go while a blue block doesn’t.”

    The researchers wondered:  what if the test was of the relationship between objects..say, two square blocks of the same color made the machine light up, but not two blocks of different colors?

    For American children, 18-month-old children had no trouble figuring out that the relationship between the objects was the key thing.  But older American children, 3-year-olds, did worse at the relationship test than did their younger counterparts.  For Chinese children, however, the fall-off in relationship-assessing performance between 18 months and 3 years old did not happen.

    Here’s a reasonably decent summary of the paper’s main points, and here’s the paper itself.

    Why the fall-off for American kids?  (A temporary fall-off, it seems…the researchers say that the American kids recover their relationship-assessing skills between the ages of  4-6 years.)  One hypothesis is language….possibly the “noun spurt” that is said to characterize early-English learning has something to do with it.  Or perhaps there are broader cultural factors:  “In particular, there are well-documented differ- ences in holistic and analytic processing (and relatedly, collectivist and individualist cognitive styles) across cultures, which may simi- larly result in an emphasis on relationships between entities or on characteristics of individual entities. More broadly, environmental variation across these learning contexts (e.g., socioeconomic status, number of siblings, and pedagogical and child- rearing practices) may differentially affect general cognitive skills that are known to influence relational reasoning, like executive function.”  (quoted from the paper)

    Or, perhaps, could there be a genetic explanation?…Would children of Chinese ancestry, raised in the US in English-speaking homes, show more often the Chinese  pattern or the American pattern in these experiments?  While a genetic explanation seems unlikely to me, I would think it should at least be considered.

    Most likely, to me, seems the language explanation.  The Sapir-Whorf hypothesis, which has also been dubbed ‘linguistic relativity’, holds that the language we speak has a major impact on how we perceive the world…it fell into some disrepute after WWII because of its appropriation by the Nazis to make claims of cultural superiority and also because of some apparent errors in Whorf’s reporting, concerning for example the Inuit words for ‘snow’…it does make sense, however, that language has a significant impact on what thoughts can be most easily expressed and hence on what thoughts are most likely to be conceived.

    Posted in Academia, China, Deep Thoughts, Human Behavior, USA | 10 Comments »

    The Compleat Spy Requires AI

    Posted by David Foster on 18th June 2019 (All posts by )

    China’s intelligence services appear to be using LinkedIn, with profile pictures generated artificially, for the recruitment of agents.

    Chinese intrusion into US affairs has not generally gotten anywhere near the attention that Russian intrusion…real, attempted, or imagined…has gotten, but it needs more visibility.  See my related post So, Really Want to Talk About Foreign Intervention?

    Posted in Business, China, Internet, Russia, Tech | 3 Comments »

    The Trade War and Agriculture.

    Posted by Michael Kennedy on 11th May 2019 (All posts by )

    We are entering a period when the tariff controversy with China is getting serious.

    The Wall Street Journal is worried.

    A failure to break an impasse in talks in Washington on Friday opened a new phase in the trade fight after more than five months of back-and-forth negotiations. This time, some economists and analysts said, Beijing is taking stock of potential economic damage from higher tariffs.

    The U.S. raised punitive tariffs to 25%, from 10%, for $200 billion in goods leaving China on Friday and thereafter. President Trump also ordered staff to begin the paperwork to impose levies on the more than $300 billion worth of everything else China sells to the U.S.

    While Beijing has met previous volleys of tariffs from the U.S. by raising duties on American goods—and the government has promised to retaliate—it held its fire. Though China has more limited tariff options, since it imports fewer products from the U.S. than the other way around, the Chinese leadership is also constrained by an economy that is in a shaky recovery from a sharp slowdown.

    There is talk of China boycotting US farm products. They tried it a year ago.

    The world’s biggest oilseed processor just confirmed one of the soybean market’s biggest fears: China has essentially stopped buying U.S. supplies amid the brewing trade war.

    “Whatever they’re buying is non-U.S.,” Bunge Ltd. Chief Executive Officer Soren Schroder said in a telephone interview Wednesday. “They’re buying beans in Canada, in Brazil, mostly Brazil, but very deliberately not buying anything from the U.S.”

    In a move that caught many in U.S. agriculture by surprise, China last month announced planned tariffs on American shipments of soybeans.

    The boycott failed.

    “China has to resume purchases of U.S. soybeans,” Oil World said in its latest newsletter. “The South American supply shortage will make it necessary for China, in our opinion, to import 15 million tonnes of U.S. soybeans in October 2018/March 2019, even if the current trade war is not resolved.”

    China may not be in good shape to handle a trade war.

    Read the rest of this entry »

    Posted in China, Current Events, Economics & Finance, Politics, Trump | 58 Comments »

    A Robot of the Week, Revisited

    Posted by David Foster on 20th February 2019 (All posts by )

    In a robots of the week post a while back, I mentioned two companies that are attempting to automate the apparel-production process. Recently, one of these companies, Softwear Automation, announced that its Sewbot product is now also available on a rental basis under the banner Sewbot as a Service.  (SaaS, playing off the acronym for the currently-hot field of Software as a Service.)  From the SaaS announcement:

    From 1994 to 2005, the United States lost more than 900,000 textile and apparel jobs to offshoring.

    Fast-forward to 2018. The pendulum is swinging back and textiles are returning as lean, highly automated, environmentally conscious production facilities. Within the last six years, there have been significant announcements by foreign-owned textile companies investing in the United States, with site selection choices clustered in the Southeast including the first Chinese owned Cut Make Trim factory in Arkansas.

    Despite this industry reversal, the seamstresses are not returning. While the knowledge can be shared to upskill workers, people don’t have the  desire to work in a traditional textile factory.

    To solve this and accelerate the growth of US based textile manufacturing, Softwear Automation is announcing SEWBOTS-as-a-Service, a rental lease service to allow manufacturers, brands, and retailers to source and manufacture here in the US at a lower cost than outsourcing and with greater predictability and quality. While we understand the benefits of “Made in America”, the focus of this program is to offer US textile manufacturing more control, greater margin, faster turn times and less inventory.

    The rental rate for Sewbot is quoted as starting at $5000/month, which comes to $55/shift for a three-shift operation.Softwear is also now offering production-rate estimates for various kinds of textile products. For microfiber towels, a single operator supervising 6 robots can make 2880 towels in an 8-hour shift, compared with 223 towels for a single operator performing traditional manual activities.   Other product types which the company sees as suitable for Sewbot automation include mattress covers, pillows, automotive floormats, t-shirts, and shoes (uppers).

    Most aspects of the apparel supply chain have long been highly automated: indeed, the mechanization of spinning and weaving was the hallmark of the Industrial Revolution.  The sewing process, however, has remained stubbornly labor-intensive, largely because the flexible nature of fabric makes it hard to handle mechanically.  Softwear Automation’s solution involves the use of machine vision for precise fabric positioning.  This article at IEEE Spectrum explains a little bit about how it works.

    Depending on how well these systems turn out to work in practice, and how the technology evolves, they may turn out to be not only the robots of the week, but the robots of the year or even the decade.  Apparel-making is a vast industry, concentrated in nations which are not-so-well-off economically, and employs a large number of people. A high level of automation would likely result in much of this production being relocated closer to the markets, thus saving transportation costs and shortening supply cycles.  The consequences for countries like China, Bangladesh, and Sri Lanka could be pretty unpleasant.  For the US, the onshoring of the work would seem clearly to be beneficial.

    I don’t know enough about the industry to analyze the economics of Sewbot vs low-wage-country production in any depth, but back-of-the envelope for one product type (the towels) suggests that on a pure direct labor cost per unit basis, a US-based Sewbot can still be undercut by human labor rates below about $4/hour.  (Calculated using the rental rate:  for many companies, purchase may offer better economics.)  But production isn’t the only factor in the product cost equation, of course, and in many situations proximity to end markets will be of considerable value: especially simpler inventory control and faster response to style changes. And a Made in the USA label is surely worth at least something.  Also, the economics may be different for some of the other product types…for the t-shirts, the company is citing a unit cost of $.33 for US-based production using  Sewbot…this compares with something around $.22 for a country such as Bangladesh, and is probably cheaper than China at the current wage rates.

    Read the rest of this entry »

    Posted in Business, China, India, International Affairs, Tech, USA, Vietnam | 6 Comments »

    Even Smart People Get It Wrong Sometimes

    Posted by David Foster on 7th February 2019 (All posts by )

    Economist Art Laffer:

    “China is a huge plus to the U.S. because without China there is no Walmart, and without Walmart there is no middle class or lower class prosperity in America.”

    Actually, the US was known for broad-based prosperity long before either Walmart or China was a significant factor.  It was really only in the 1980s that Walmart’s expansion really took off…and it was then by no means as China-dependent as it has more recently become.  Indeed, starting in 1984 and extending at least through the early 1990s, Walmart was a strong supporter of the Crafted with Pride in the USA campaign, which was launched by textile entrepreneur Roger Milliken, among others.

    China’s presence in the global marketplace was greatly expanded by the Permanent Normal Trade Relations bill, which was signed by President Clinton in October 2000, as well as by China’s own economic-liberalization policies.  (Some data on the growth of Chinese exports over time, here)

    Real mean US household income, which is effectively a measure of price levels as well as wages/salaries, grew from $71773 in 1985 to $93887 in 2000.  Fifteen years later, in 2015, it had risen to only $95887.  (2017 dollars)

    Real median household income  grew from $51455 in 1985 to $59938 in fifteen years later, in 2000. In 2015, this indicator had actually declined to $58476.  (It grew to $61372 by 2017)

    There are a lot of factors that affect an economy, of course, and it would be unfair to conclude that the slowdown in American household income growth was caused by the vast expansion of trade with China.  Maybe it would have been even worse without Chinese imports and exports?

    National Review writer Robet VerBruggen cites “research” suggesting that “consumers save hundreds of billions of dollars per year thanks to expanded trade with China, and six-figure sums for every manufacturing job lost.  (Tucker) Carlson may be right that cheap junk from China doesn’t make us happy in any fundamental way, but it would put serious strains on family budgets if all that junk got expensive again.”

    Maybe. But I doubt if the strains would really be all that serious over time. If manufacturers did not have vast reservoirs of low-wage labor available for production of a particular product, then the incentives to improve productivity when making that product with high-wage labor would be greatly increased. Capital investment that makes no sense when you are paying workers $1.50/hour may make great sense when you have to pay $15/hour.  Furthermore, product designs themselves can often be changed in minor ways to make them more manufacturable; again, this would help reduce the cost impact of domestic or other high-wage-country manufacturing.

    I doubt if the strains on family budgets resulting from such changes in production-labor costs would have anywhere near the impact that has resulted from dysfunctional public schools (resulting in a need to pay for private schooling or move to a pricier neighborhood), unreasonable constraints on home-building, and out-of-control administrative and facilities spending by universities, coupled with irresponsible marketing of degree programs and student loans by same.

    One thing that has definitely been beneficial about China’s export trade is the drastic reduction in poverty in that country; this reduction is indeed something that we should all celebrate.  I suspect, however, that given economic liberalization, China could probably be doing just as well or almost as well with an economic approach that is not so extreme in its trade orientation but more focused on satisfying domestic demand…and this would probably be much more sustainable for them in the long run.

    Also, here are some additional links on US wage trends for anyone who’s interested:

    Read the rest of this entry »

    Posted in Business, China, Economics & Finance, Tech, USA | 29 Comments »

    Worthwhile Reading

    Posted by David Foster on 27th January 2019 (All posts by )

    Why do journalists love twitter and hate blogging?

    The legacy of China’s Confucian bureaucracy.  Related:  my previous post on the costs of formalism and credentialism.

    Stroking egos does nothing for students — raising expectation does.

    Magic and Politics.

    Related to the above:  Witches: the new woke heroines.

    Legos, marketing, and gender.  “In 1981,” says a woman who as a child was pictured in a Legos ad back then, “LEGOs were ‘Universal Building Sets’ and that’s exactly what they were…for boys and girls. Toys are supposed to foster creativity. But nowadays, it seems that a lot more toys already have messages built into them before a child even opens the pink or blue package.”

    What will be the economic impact of China’s increasing emphasis on economic control and preferential treatment for state-run enterprises?

    What is the fastest the US economy can grow?

    Midnight at the Gemba. Kevin Meyer visits the night shift at the medical-device molding plant he was running.

    Posted in Blogging, Business, Capitalism, China, Culture, Economics & Finance, Management, Media, Religion | 12 Comments »

    The Costs of Formalism and Credentialism

    Posted by David Foster on 16th December 2018 (All posts by )

    Via Grim, an interesting post at the Federalist:  Our Culture War Is Between People Who Get Results And Empty Suits With Pristine Credentials.

    Subtitle:  Donald Trump declines the authority of the cultural sectors that most assertively claim it. That’s the real conflict going on.

    I’m reminded of an interchange that took place between Picasso and Monet as the German Army advanced through France in 1940.  Monet was shocked to learn that the enemy had already reached Reims.  “But what about our generals?” asked Monet. “What are they doing.”

    Picasso’s response: “Well, there you have it, my friend. It’s the Ecole des Beaux-Arts”

    …ie, formalists who had learned one set of rules and were not interested in considering deviations from same.

    It was an astute remark, and it fits very well with the observations of Andre Beaufre, who before the invasion had been a young captain on the French General Staff. Although he had initially been thrilled to be placed among this elevated circle…

    I saw very quickly that our seniors were primarily concerned with forms of drafting. Every memorandum had to be perfect, written in a concise, impersonal style, and conforming to a logical and faultless plan–but so abstract that it had to be read several times before one could find out what it was about…”I have the honour to inform you that I have decided…I envisage…I attach some importance to the fact that…” Actually no one decided more than the barest minimum, and what indeed was decided was pretty trivial.

    The consequences of that approach became clear in May 1940.

    In addition to the formalism that Picasso hypothesized (and Beaufre observed) on the French General Staff, the civilian side of the French government was highly credential-oriented.  From the linked article:

    In the first days of July, 1940, the American diplomat Robert Murphy took up his duties as the chargé d’affaires at the new U.S. embassy in Vichy, France. Coming from his recent post in Paris, he was as impressed as he expected to be by the quality of the Vichy mandarinate, a highly credentialed class of sophisticated officials who were “products of the most rigorous education and curricula in any public administration in the world.”

    As the historian Robert Paxton would write, French officials were “the elite of the elite, selected through a daunting series of relentless examinations for which one prepared at expensive private schools.” In July 1940, the elite of the elite governed the remains of their broken nation, a few days after Adolf Hitler toured Paris as its conqueror. Credentials were the key to holding public office, but not the key to success at the country’s business.

    It certainly appears that the current protests and riots in France are at least in part due to long-simmering resentment at that country’s credentialed class, whose performance has not matched their pretensions.  An interesting anecdote about Macron, in the Sunday Express:

    This is a man who chastised a teenager at an official event for calling him “Manu” (the friendly diminutive of Emmanuel), saying that he should not express a view until he has acquired a degree and a job.

    and

    Macron is a graduate of the Ecole Normale d’administration (ENA), an elite Grande Ecole created by General De Gaulle in 1945 to break the upper class control of top Civil Service positions. 

    In reality, only nine percent of ENA the graduates that fill the corridors of power in industry and government have a working class background.  The top 12 or 15 students will move to L’Inspection générale des finances (IGF), and then into a career in politics, or finance, Macron’s chosen route since he became a partner with Rothschild and Cie bank.

    Americans should not feel smug about our relatively-lesser obsession with credentials.  I’ve previously quoted  something Peter Drucker wrote in 1969:

    One thing it (modern society) cannot afford in education is the “elite institution” which has a monopoly on social standing, on prestige, and on the command positions in society and economy. Oxford and Cambridge are important reasons for the English brain drain. A main reason for the technology gap is the Grande Ecole such as the Ecole Polytechnique or the Ecole Normale. These elite institutions may do a magnificent job of education, but only their graduates normally get into the command positions. Only their faculties “matter.” This restricts and impoverishes the whole society…The Harvard Law School might like to be a Grande Ecole and to claim for its graduates a preferential position. But American society has never been willing to accept this claim…

    and

    It is almost impossible to explain to a European that the strength of American higher education lies in this absence of schools for leaders and schools for followers. It is almost impossible to explain to a European that the engineer with a degree from North Idaho A. and M. is an engineer and not a draftsman.

    We as a country are a lot closer to accepting Grande Ecole status for Harvard Law School and similar institutions than we were when Drucker wrote the above.  We haven’t gone as far as France and other European nations, but the trend has clearly been in the wrong direction.

    Read the rest of this entry »

    Posted in Academia, China, Deep Thoughts, Education, Europe, France, History, Society, Trump, USA | 15 Comments »

    China is our enemy.

    Posted by Michael Kennedy on 4th October 2018 (All posts by )

    UPDATE: Richard Fernandez has has a new column that bears on this issue.

    He describes a new article about what was called “The Third Way,” a political movement that was to replace the Democrats after 1988.

    The Third Way, the political movement that crested at the end of the 20thcentury and the beginning of the 21st, represented the most recent effort to reimagine the centre-left in the face of massive economic and social changes.

    At its apogee, when it dominated the politics of United States, the UK, and Germany, it was thought to provide a stable template for governance well into the new century. Confidence ran high that the business cycle had been tamed and that the forces of globalisation and technology could be managed for the good of average citizens as well as meritocratic elites.

    You could almost call it “The Deep State” and it has lost its way.

    China, in the meantime, has moved into a lead.

    As events proved, the unipolar world did not remain the only game in town. “Russia regressed to autocracy; radical Islamism went to war against the West; China became far more prosperous without becoming a whit more democratic, confuting decades of modernization theories,” Galston wrote. Entrepreneurship declined, middle class incomes stagnated and a revolt against unlimited immigration began. Most of all new decentralized technological possibilities arose within the West. In a word, the power of the elites at the center was challenged as never before. All this came to an unexpected head in 2016.

    Now all enemies are near enemies, as the supply chain problem and the “collusion” allegations in every Western country illustrate. We are engulfed in a civil war because in a globalized world that’s the only kind there is. Yet in retrospect Brexit and the election of Donald Trump should not have been the shocks they were. They were only surprises because the media refused to see the growing storm.

    There has been quite a bit lately about the China trade deficit. Trump has proposed tariffs on Chinese imports until China treats US products fairly. The recent trade talks with Mexico and Canada are based on the knowledge that much of this NAFTA trade is really with China that send products like steel to Mexico and Canada, which is then incorporated into products imported by the US as north American manufactures.

    Now we have evidence that China is more than a trade rival.

    But that’s just what U.S. investigators found: The chips had been inserted during the manufacturing process, two officials say, by operatives from a unit of the People’s Liberation Army. In Supermicro, China’s spies appear to have found a perfect conduit for what U.S. officials now describe as the most significant supply chain attack known to have been carried out against American companies.
    One official says investigators found that it eventually affected almost 30 companies, including a major bank, government contractors, and the world’s most valuable company, Apple Inc. Apple was an important Supermicro customer and had planned to order more than 30,000 of its servers in two years for a new global network of data centers. Three senior insiders at Apple say that in the summer of 2015, it, too, found malicious chips on Supermicro motherboards.

    This was an espionage act that infiltrated US Defense computer systems.

    I have been convinced for some time that Russia is a stalking horse form Democrat politicians, like the Clintons, who have been bought and paid for by China.

    One government official says China’s goal was long-term access to high-value corporate secrets and sensitive government networks. No consumer data is known to have been stolen.
    The ramifications of the attack continue to play out. The Trump administration has made computer and networking hardware, including motherboards, a focus of its latest round of trade sanctions against China, and White House officials have made it clear they think companies will begin shifting their supply chains to other countries as a result. Such a shift might assuage officials who have been warning for years about the security of the supply chain—even though they’ve never disclosed a major reason for their concerns.

    I do sometimes wonder at the violent opposition to the Trump China initiatives.

    America’s leading business lobbies, which represent every sector of our economy, have declared all out war against President Trump’s trade tariffs.
    Manufacturers, corporations of every size and shape, retail businesses, agricultural industries, and consumer groups — 45 associations in all — have joined forces to defeat the president’s plans to impose higher trade taxes on our long-standing trading partners and most loyal allies.
    The largest of these organizations, the U.S. Chamber of Commerce, which represents more than 3 million businesses nationwide, is launching an unprecedented campaign against the tariffs.

    Is this ignorance or what ?

    Posted in China | 30 Comments »

    Making iPhones in the USA?

    Posted by David Foster on 12th September 2018 (All posts by )

    Trump’s proposed tariff increase on Chinese imports would affect Apple products including the Apple Watch, though apparently not the iPhone itself.  Here is Apple’s response.

    And from President Trump:

    Apple prices may increase because of the massive Tariffs we may be imposing on China – but there is an easy solution where there would be ZERO tax, and indeed a tax incentive. Make your products in the United States instead of China. Start building new plants now. Exciting!

    There has been much discussion for some time about the economic feasibility of building Apple products–especially the iPhone–in the United States, and considerable new commentary in the wake of the tariff controversy.  In 2011, then-President Obama asked Steve Jobs what it would take to make iPhones in the US.  Steve’s response was that, basically, the problems were more about skill levels and cultural factors–in particular, he is said to have mentioned a need for 30,000 manufacturing engineers.

    This strikes me as a very improbable requirement.  Manufacturing engineers are the people who design and improve manufacturing processes:  I can’t imagine why you would need 30,000 of them for all of Apple’s product lines combined, let alone for the iPhone alone.  (It’s possible that the term “manufacturing engineers” was a misquote of what Jobs actually said, or the Jobs was speaking very loosely–indeed, he apparently went on to say that the people in question could be educated in trade schools.  Maybe he meant toolmakers…although also, 30,000 toolmakers sounds like an awful lot for iPhone or indeed all of Apple…or shift supervisors, or something of the sort.

    There was a Quora discussion in 2016 on the topic:  How much would an iPhone cost if Apple were forced to make it in America?  Out of all the responses, which were of various quality, Forbes chose in January of this year to reprint one that seems to me to be rather extreme:  In the $30,000 to $100,000 range…assuming it could be made at all.

    The author quotes Apple CEO Tim Cook on the skills gap between China and the US:

    … the reason is because of the skill … and the quantity of skill in one location … and the type of skill it is. The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here.

    In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.

    The author says:

    Tooling engineering is a highly skilled position that requires years of training and experience. It is an “analog” type skill that combines artisanal craftsmanship with precision engineering skills. And as Mr. Cook alludes to later in the talk, the Chinese have developed and scaled these skills over the last three decades while the U.S. and other countries have gone the other direction and de-emphasized them.

    (The author also talks about the fact that the iPhone supply chain is now largely centered in the Far East, which is true–but “moving iPhone manufacturing to the US” does not imply that every single component or subcomponent or raw-material element in the periodic table would need to come from the US.)

    It is certainly true that the US over the past couple of decades has deemphasized manufacturing-related skill sets:  but I doubt seriously that the problem is so severe as to make the US manufacturing of a product like iPhone infeasible.  After all, cars and trucks are made in the US, and they involve quite a lot of production engineering and tooling.  Airplanes and jet engines, too, are made here, and I’d expect that the production engineering challenges for a GE or P&W jet engine equal or exceed anything involved with making an iPhone.  And there are plenty of other products and components manufactured in the US as well.

    Read the rest of this entry »

    Posted in Business, China, Trump | 36 Comments »

    China, Taiwan, and the Third World

    Posted by David Foster on 28th August 2018 (All posts by )

    China has been making many investments in third-world countries, often in exchange for resource concessions.  There is growing concern that some of these projects leave the host country with too much debt–indeed, last December, Sri Lanka sold control of its port of Hambantota to a Chinese state-owned company after falling behind in repaying $1.5 billion in loans from Beijing.  Further such situations seem likely.  (See interesting article about Chinese investment in Malaysia here.)

    China has also been accused of using aid and investment funds to influence other countries’ policies toward Taiwan, an accusation that they unsurprisingly deny…and Taiwan is now down to only one diplomatic ally in Africa, the kingdom of eSwatini  (prevously known as Swaziland.)  El Salvador, too, has recently dropped diplomatic ties with Taiwan.

    See also my recent post about Chinese influence efforts targeted at other nations, including the limiting of US film content and the firing of an American employee of Marriott for liking a tweet which offended the regime.

     

     

    Posted in Business, China, Economics & Finance, Transportation | 10 Comments »

    History Week End: MacArthur’s Forgotten New Guinea Air Warning Wireless (NGAWW) Company Aircraft Spotters

    Posted by Trent Telenko on 19th August 2018 (All posts by )

    I have often stated in an earlier Chicago Boyz columns on Gen Douglas MacArthur that:

    One of the maddening things about researching General Douglas MacArthur’s fighting style in WW2 was the way he created, used and discarded military institutions, both logistical and intelligence, in the course of his South West Pacific Area (SWPA) operations. Institutions that had little wartime publicity and have no direct organizational descendant to tell their stories in the modern American military.

    Today’s column is on another of those forgotten institutions, the New Guinea Air Warning Wireless (NGAWW) company, and the US military leader who saw to it that it’s story was forgotten in the institutional American military histories of World War II.

    Australian signallers from the New Guinea Air Warning Wireless Company (AWM photo 015364 ).jpg

    Australian signalers from the New Guinea Air Warning Wireless Company with a AWA 3BZ Teleradio transceiver (AWM photo 015364 ) Public Domain photo found on Wikipedia

    DESPERATION & INNOVATION

    In January 1942 — after the Fall of Rabaul and before the Japanese Carrier Strike on Darwin — the Australian military recognized it needed a system of radio equipped ground observers in New Guinea to warn Australian outposts of incoming air attacks.  Thus was born the New Guinea Air Warning Wireless Company (NGAWW), which was a inspired combination of innovation and desperation using the organizational templates (and Amalgamated Wireless Australasia (AWA)  Teleradio series wireless sets) of the Australian Royal Navy Coast watchers and the Royal Air Force Wireless Observer Units   used in North Africa.  [1] [2]

    Read the rest of this entry »

    Posted in China, History, Military Affairs, War and Peace | 25 Comments »

    The Question the WSJ Didn’t Ask

    Posted by David Foster on 13th August 2018 (All posts by )

    The Wall Street Journal, on its editorial page, writes about a company called Standard Textile, whose economic viability is apparently being threatened by the 25% tariffs on imports of its main production input:  a type of fabric sourced from China and known as greige, which I believe is basically the fabric as it comes off the loom, unfinished and un-dyed.  The company is especially concerned because finished products from China which compete with its own products are tariffed at only 6.7%.   WSJ uses this example to argue that Trump is all wrong on tariffs, and does so in the rather superior manner (the title of the piece is ‘a looming trade lesson’) which is common among those who ascribe any objections to absolutely free trade as based on nothing but economic ignorance or political demagoguery.

    I will stipulate that it seems rather dumb to tariff raw materials and intermediate goods at a higher level than finished products made from these inputs.  But..is it really true that greige fabrics are available only from China?  A few minutes of searching suggests that they are available from India, and from at least some US suppliers.  Maybe there is some particular variant of the products that is only made by a specific Chinese supplier, or maybe Standard has negotiated such a great deal with their supplier that no one else will match the price–it would be interesting to know.

    The big question that the WSJ didn’t ask is:  Why is this fabric (if it is truly unavailable in the US) not manufactured here?  Textile manufacturing is not generally a labor-intensive activity, it is very different on this measure from the transformation of the textiles into apparel and other finished products.  It was one of the first industrial activities to be mechanized, and automation in this field has advanced steadily over a couple of centuries.  Moreover, textile manufacturing uses significant amounts of power, and I’ve read about Chinese firms that moved to the US specifically because the electricity was cheaper and more reliable.  So the usual arguments about why a particular item needs to be made in China or other non-US setting…labor costs, less-stringent environmental restrictions…don’t seem to really apply here.

    Most likely, greige manufacturers tend to locate in Asia and other non-US locations because that is where their customers are…’customers’ here referring not to end consumers but to apparel manufacturers and others who buy the material as an input to their own processes…and geographical proximity is of value in being able to fill orders rapidly and without excessive shipping costs.  So this is an example of how supply chains are interconnected, and how losing one industry in a chain tends to pull other industries away also.  The same point has also been demonstrated in consumer electronics manufacturing, where the supply chain is now so centered in Asia, especially China, as to make it difficult for a company to produce these products in the US even if they want to.  (And ‘supply chain’ in this sense does not include physical products, it also includes certain services.  I have been told by the CEO of a medical electronics startup that she would find it difficult to manufacture in the US due to absence of certain specialized services; I believe she mentioned RF test facilities)

    A serious analysis of America’s trade situation should involve more than quoting David Ricardo and lecturing people about their supposed economic ignorance.  The WSJ article would have been more intellectually-honest and more useful had it also given examples of American manufacturers who are benefitting from the modified tariffs; these examples certainly exist.

    Best of luck to Standard Textile.  Hopefully, (a) the tariffs, if they remain in place, will be adjusted to level the rate between imported fabric and imported finished goods, and (b) US manufacturers of this fabric will come into being.

    Posted in Business, China, Miscellaneous, Tech, Trump, USA | 20 Comments »

    Is China involved in the Russia-Trump hoax ?

    Posted by Michael Kennedy on 12th August 2018 (All posts by )

    We have been subjected to a year and a half, almost two years, of constant hysteria about Russia and whether they helped Trump win the 2016 election. There has been no evidence of any collusion and the Mueller “special counsel” investigation seems to be winding down.

    Rush Limbaugh has some interesting ideas about what is going on.

    So the only possible way they can get rid of Trump here is via politics, and that’s to drive his approval numbers down so that Republicans in Congress have no reason to support him. If Republicans in Congress — the House and Senate — could be forced to abandon their support for Trump, as happened to Nixon, then he would have to go. I don’t know if Trump would play ball even in that scenario like Nixon did. I think Trump would dare them to impeach him and try to remove him. I don’t think Trump’s gonna play ball the way the establishment thinks.

    Democrat voters are highly motivated to vote in the November election, at least in part, to impeach Trump. Why ?

    There seems to be no letup in the frenzy to demonize Trump.

    In 21st-century America, it is difficult to conjure the possibility of the federal government taking an eraser to the map and scrubbing away an entire ethnic group. I had arrived in Columbus at the suggestion of a Cleveland-based lawyer named David Leopold, a former president of the American Immigration Lawyers Association. Leopold has kept in touch with an old client who attends the Mauritanian mosque. When he mentioned the community’s plight to me, he called it “ethnic cleansing”—which initially sounded like wild hyperbole.

    “Mosque.” Hmmm.

    Read the rest of this entry »

    Posted in China, Crony Capitalism, Russia, Trump | 15 Comments »

    So, Really Want to Talk About Foreign Intervention?

    Posted by David Foster on 3rd April 2018 (All posts by )

    Much ink and many photons have been spent discussing Russia’s attempts to influence (or at least disrupt) the American 2016 Presidential campaign.  Meanwhile…

    Here’s an appalling story about how anger from the Chinese government led Marriott Corporation to fire an employee who had ‘liked’ a tweet which congratulated the company for listing Tibet as a country, along with Hong Kong and Taiwan….of course, the Chinese regime considers Tibet to be a part of China, not a separate country.

    China forced Marriott to suspend all online booking for a week at its nearly 300 Chinese hotels. A Chinese leader also demanded the company publicly apologize and “seriously deal with the people responsible,” the Journal reported.

    And boy, did Marriott ever apologize. Craig Smith, president of the hotel chain’s Asian division, told the China Daily that Marriott had committed two significant mistakes — presumably the survey listing Tibet and the liked tweet — that “appeared to undermine Marriott’s long-held respect for China’s sovereignty and territorial integrity.”

    He announced an “eight-point rectification plan” that included education for hotel employees across the globe and stricter supervision.

    And the Marriott executive said this to China’s most-read English-language newspaper: “This is a huge mistake, probably one of the biggest in my career.”

    (More here…according to this article, the Chinese suppression of Marriott bookings was in response to the initial listing of Tibet as a country rather than to the tweet approving of this listing)

    The Chinese economy is, shall we say, a little more dynamic than that of Russia, so the government of China has much more ability to strong-arm American corporations (in general) than does the Putin regime.

    Turning now from the hotel industry to the movie industry, Richard Gere says that Chinese pressure due to his stand on Tibetan independence has led to his being dropped from big Hollywood movies.  Also:

    Gere’s activities have not just made Hollywood apparently reluctant to cast him in big films, he says they once resulted in him being banished from an independently financed, non-studio film which was not even intended for a Chinese release.

    “There was something I was going to do with a Chinese director, and two weeks before we were going to shoot, he called saying, ‘Sorry, I can’t do it,’” Gere recalled. “We had a secret phone call on a protected line. If I had worked with this director, he, his family would never have been allowed to leave the country ever again, and he would never work.”

    See also How China’s Censors Influence Hollywood.  Because the Chinese market is so large…(Fast and Furious 7 pulled in $388 million in China, more than it made in the US)…the influence of the Chinese regime on US film production and distribution has become immense.

    In recent years, foreign filmmakers have also gone out of their way not to provoke the Communist Party. For instance, the 2012 remake of the Cold War action movie, Red Dawn, originally featured Chinese soldiers invading an American town. After filming was complete, though, the moviemakers went back and turned the attacking army into North Koreans, which seemed a safer target, at least until last year’s hack of Sony Pictures.

    and

    Ying Zhu, a professor of media culture at the College of Staten Island at the City University of New York, worries China’s growing market power is giving the Communist Party too much leverage over Hollywood.

    “The Chinese censors can act as world film police on how China can be depicted, how China’s government can be depicted, in Hollywood films,” she says. “Therefore, films critical of the Chinese government will be absolutely taboo.”

    In the late 1990s, when China’s box office was still small, Hollywood did make movies that angered the Communist Party, such as Seven Years In Tibet, about the life of the Dalai Lama, and Red Corner, a Richard Gere thriller that criticized China’s legal system. Given the importance of the China market now, Zhu says those movies wouldn’t get financing today.

    Plus, Chinese companies have snapped up Hollywood studios, theaters and production companies.

    Read the rest of this entry »

    Posted in Academia, Business, China, Civil Liberties, Civil Society, Environment, Film, Media, Russia, Science, Tech, USA | 34 Comments »

    Robots of the Week

    Posted by David Foster on 12th September 2017 (All posts by )

    Sewing robots.  Although spinning and weaving have long been highly mechanized, the final phase of the apparel-making value chain has resisted automation:

    IN 1970 William J. Bank, president of the Blue Jeans Corporation, predicted that there would be a man on Mars before the production of apparel was automated. Almost half a century later, he has not yet been proved wrong. 

    But that may change soon, given recent development in robotic sewing. Two companies, Softwear Automation (Atlanta) and Sewbo (Seattle) are pursuing different strategies:  Softwear’s approach is to create computer vision and robotic manipulation which is intelligent and subtle enough to deal with highly flexible fabric, whereas Sewbo’s approach is to temporarily stiffen the fabric in order to make working with it more like metalworking.

    Depending on how well these systems work in practice, and how the technology evolves, they may turn out to be not only the robots of the week, but the robots of the year or even the decade.  Apparel-making is a vast industry, concentrated in nations which are not-so-well-off economically, and employs a large number of people. A high level of automation would likely result in much of this production being relocated closer to the markets, thus saving transportation costs and shortening supply cycles.  The consequences for countries like China, Bangladesh, and Sri Lanka could be pretty unpleasant.

    Most likely, unforeseen problems will slow the full deployment of these systems and an Apparel Apocalypse will not occur.  It would certainly be wise, though, for the leaderships of apparel-manufacturing-intensive countries to focus on the need to develop a broader employment base.

    More here.

    See also my post on 3d knitting

    Posted in Business, China, Tech | 5 Comments »

    Free Trade with a Hostile Mercantilist Empire?

    Posted by Kevin Villani on 14th March 2017 (All posts by )

    2017 marks the 200 year anniversary of David Ricardo’s publication on the theory of comparative advantage that underlies the economic case for free trade. Several years later Frederic Bastiat wrote the satirical Candle Maker’s Petition debunking the arguments in favor of protectionism. This was an ironic choice, as candle makers were politically protected by the Founding Fathers as necessary for the Revolutionary War. These protections lasted several centuries, and in 2016 Senator Chuck Schumer sought it re-instated on grounds of unfair competition from China.

    President Trump’s trade representative economist Peter Navarro is making both the political and economic case against free trade with China, which he considers a mercantilist trader with military ambitions hostile to the U.S.

    Navarro’s political case is an update of that faced by the Founders regarding candle making. China is viewed as pursuing a trading strategy to accumulate wealth and technical know-how to challenge the U.S. militarily in the South China Sea and globally. China’s mercantilist trade practices result in huge export surpluses with the U.S. He argues that China uses this advantage to weaken America’s industrial base and future defensive capability.

    While economists can’t reject this political concern out of hand, it does seem several decades premature given the relative size of the two countries’ navies. At present the US could quickly secure sources of supply for military purposes, and protectionism tends to linger for decades or even centuries.

    The second case against free trade with a mercantilist trader relates mostly to the loss of jobs due to “unfair” competition, i.e., not due to inherent comparative economic advantages as much as political subsidies, in China’s case a purportedly cheapened currency and weak labor and environmental protections. The standard argument is that such trade generally benefits consumers at the expense of high cost producers, resulting in a less political more fair distribution of consumption as well as a higher overall level. Read the rest of this entry »

    Posted in Big Government, Business, China, Economics & Finance, International Affairs, Japan, Markets and Trading, Politics, Public Finance, Trump | 11 Comments »

    Why does Germany do such monumentally stupid things?

    Posted by Mrs. Davis on 25th February 2017 (All posts by )

    I was reading Arthur Herman’s column in the WSJ Decoding the Zimmerman Telegram, 100 Years Later and I began to think about all the really, really dumb things Germany has done. And it’s not as if the Germans are dumb. A look at the Nobel prize list makes it clear that there are many brilliant Germans. But if we go back in history and look at the political decisions Germany has made, it is a cavalcade of catastrophe. In the 19th century, Germany was the cradle of socialism, not all the ideas, but certainly the movement. Then it decided to unite Germany, not a bad idea in and of itself; but it then led to the idea that it should conquer Europe. In the process, it threatened the US with invasion by Mexico, bringing the US into the war and onto the world stage. And to top it, they put Lenin in a rail car and sent him to St. Petersburg launching the Soviet Union. Hitler then rekindled the idea of conquering Europe, including the incredible decision to invade Russia and then declaring war on the United States directly, creating an enemy that might have sat out the European war.

    After suffering a defeat as devastating to Germany’s people as the Thirty Years War, Nato was created to keep the Americans in, the Russians out and the Germans down. And for 70 years it was a success. Germany started well by establishing an economic powerhouse. It succeeded in reuniting Germany after the cold war was won by the US in spite of German handicapping. But since then it has made decisions with terrible consequences, not only for Germany, but for much of Europe. It has used the EU and the Euro to peacefully achieve, with American connivance, what it twice failed to do by violence. And the consequences have become deleterious at best for the rest of Europe. The Energiewende has been a catastrophe, leading to more pollution by increasing the coal and biomass burned to create energy and the highest electricity costs in Europe. Germany’s refugee policy has invited invasion by unassimilabe masses inimical to European culture and values. And a policy of minimal defense expenditures has led the Americans to consider getting out and the Russians getting back in. And now China has become Germany’s largest trading partner.

    I have long felt that the EUropeans were more than capable of defending themselves and we should pull out of Nato to force them to do so and to save money. Why should we allow them to freeload? But now with the Americans leaving, the Russians returning, and the Germans rising, I am having second thoughts as I consider the possible consequences.

    Posted in China, Europe, Germany, Miscellaneous, Russia, Tradeoffs, USA | 21 Comments »

    The Ballpoint Pen as an Economic Case Study

    Posted by David Foster on 20th January 2017 (All posts by )

    Chinese Premier Li Keqiang has lamented China’s inability to “make ballpoint pens with a smooth writing function.” After five years of research, a state-owned steel company now says it can.

    WSJ notes that 80% of the world’s ballpoint pens are made in China…but that thus far, China has not been making all of the pen’s components.  Specifically:

    The tip of a high-quality ballpoint demands metal work involving high-precision machinery and very hard, ultrathin steel plates. So 90% of pens made in China have imported tips. China’s leaders want “self-sufficiency,” in pens as in semiconductors. Now they claim they’ll have it.

    This little story is interesting from at least three angles.

    First–as the WSJ story points out, China’s desire to control the entire ballpoint pen supply chain indicates that their leaders still value economic autarky, and that Chinese leadership denunciation of President Trump on grounds of his insufficient respect for free trade carry more than a whiff of hypocrisy.

    Second–the ballpoint pen example makes the point that the apparent simplicity of a product does not necessarily reflect the complexity or lack thereof involved in manufacturing it.  American economic commentators often fail to grasp this point when they assert that America’s future must lie in producing “advanced high-technology products.”

    Third–the example should also clarify the point that the highest value in a product supply chain does not necessarily lie in the assembly of the final product.  The final product assembly is usually the most visible part of the supply chain, but very often the creation of components that go into that chain involves more complexity and requires more skill than the final assembly process itself.  It’s considerably more difficult to make integrated circuits, for example, than to assemble those chips onto circuit boards and to assemble the boards into a plastic or metal case.

    Posted in Business, China, Economics & Finance, Tech, USA | 44 Comments »

    Worthwhile Reading & Viewing

    Posted by David Foster on 15th December 2016 (All posts by )

    A USAF jet fighter pilot flies a WWII P-51 Mustang.

    An argument that China will never be as wealthy as America.  (‘Never’ is a long time, though)

    A huge database of artworks, indexed on many dimensions.

    An ethics class that has been taught for 20 years (at the University of Texas-Austin) is no longer offered.  According to the professor who taught it:

    Students clam up as soon as conversation veers close to anything controversial and one side might be viewed as politically incorrect. The open exchange of ideas that used to make courses such as Contemporary Moral Problems exciting doesn’t happen. It’s not possible to teach the course the way I used to teach it.

    At the GE blog:  Direct mind-to-airplane communication…and, maybe someday, direct mind-to-mind communication as well.  Although regarding the second possibility, SF writer Connie Willis raises some concerns.

    Also at the GE blog:  The California Duck Must Die – a very good explanation of the load-matching problems created when ‘renewable’ sources become a major element of the electrical grid. Media discussion of all the wind and solar capacity installed has tended to gloss over these issues.

    The Battle of the Bulge, December 1944 – January 1945.

    Posted in Academia, Aviation, China, Deep Thoughts, Economics & Finance, Education, Energy & Power Generation, History, War and Peace | 3 Comments »

    Hiring a President

    Posted by David Foster on 13th October 2016 (All posts by )

    When hiring someone for an important job, it is of course important to assess whether or not that person has the skills you think are necessary for doing the job well.  But it’s important to also assess what they think are the important aspects of the job, and make sure these line up with what you think are the most important job factors.  You want to know what they are ‘passionate’ about, to employ a currently-overused term.

    And when hiring an executive, keep in mind that you are also likely gaining access to his network of former employees, customers, suppliers, consulting firms, etc.  A similar but even more powerful dynamic plays out in politics, as Daniel Henninger of the WSJ reminds us:

    A recurring campaign theme of this column has been that the celebrifying of our presidential candidate obscures the reality that we are not just just electing one famous person.  We will be voting into power an entire political party, which has consequences for the country’s political direction no matter what these candidates say or promise.

    By that measure, there is a reason not to turn over the job of fighting global terrorism to the Democrats.  They don’t want it.

    So, what are they key aspects of the Presidential job that needs to be done over the next four years, and how do the candidates and their beliefs about what is important stack up against those factors?  Here’s my list..

    The suppression of radical Islamic terrorism.  Henninger is completely correct: the Democrats don’t want this job.  Henninger notes that during a House hearing in 2005, Guantanamo Bay was denounced (almost entirely by Democrats, I am sure) as ‘the Gulag of our times.’  Whereas GOP Congressman Mike Pence correctly responded that the comparison was ‘anti-historical, irresponsible and the type of rhetoric that endangers American lives.’

    Henninger continues: ‘Dahir Adan invoked Allah while stabbing his way through the Minneapolis mall.  Both Mrs Clinton and President Obama consistently accuse their opponents of waging a war on all practitioners of the Islamic religion. Presumably, if instead we were being attached by Martians, they’d say any criticism of Martians was only alienating us from all the People on Mars. The problem is we aren’t getting killed by Martians or Peruvians or Finns but by men and women yelling ‘Allah Akbar’…Virtually all Democratic politicians refuse to make this crucial distinction.’

    The protection of free expression. As long as we have free speech and a free press, there is a possibility that our array of problems can be solved.  But once this crucial feedback connection is cut, problems of all kinds are likely to compound themselves until catastrophe happens.

    Remember, Hillary Clinton’s response to the Benghazi murders was to blame them on an American filmmaker exercising his Constitutional rights, and to threaten to have him arrested.  Which threat she was indeed able to carry into execution.

    And note that Hillary Clinton’s Democratic Party is closely aligned with the forces on college campuses which are creating a real nightmare for anyone–student or professor–who dissents from the ‘progressive’ orthodoxy or who even demonstrates a normal sense of humor.

    There is a very strong tendency among Democrats to call for the forcible government suppression of political dissidents, and to carry this belief into action when they can get away with it:  the witch-hunt in Wisconsin and the IRS persecution of conservative organizations and individuals being only two of many examples.  More here.

    Trump is by no means ideal on this metric: he is thin-skinned and has shown himself to be very litigious.  But he is far preferable from a free-expression standpoint to Clinton and the forces that she represents.

    Economic growth.  Clinton herself would surely like to see economic growth, if only  for political reasons.  But there is in the Democratic Party a very strong strain that believes America is too wealthy, that our people have too many luxuries, that we need to be taken down a peg. I have even seen attacks by ‘progressives’ on the existence of air conditioning. The Democrats are generally willing to sacrifice economic growth on the altar of environmental extremism and to serve their trial-lawyer clients. Sexual politics represents another cause for which growth is readily sacrificed by Democrats–remember when Obama’s ‘shovel-ready’ stimulus package was first mooted, there was an outcry from left-leaning feminist groups concerned that it would be too focused on ‘jobs for burly men.’

    And whatever her ‘small business plan’ may be in her latest policy statement, Hillary has an underlying dismissiveness to those small businesses–the vast majority of them—that do not enjoy venture capital funding.  Remember her remark, when told back in the Bill Clinton administration, that aspects of her proposed healthcare plan would be destructive to small businesses?  Her response was:  “I can’t be responsible for every undercapitalized small business in America.”  No one was asking her to be responsible for them, of course; only to refrain from wantonly destroying them.

    It is important to note that many of the top Democratic constituencies don’t really need to care, on a personal level, about economic growth. Tenured academics have salaries and benefit packages which are largely decoupled from the larger economy.  Hedge-fund managers often believe they can make money as readily in a down market as an up market. Many if not most lawyers are more dependent for their incomes on the legal climate than the economy. Very wealthy individuals may care more about social signaling than about money per se, given that they already have so much of the latter.  And the poor and demoralized will in many cases care more about transfer payments than about the growth of the economy.

    Improving K-12 Education.  Much of the nation’s public school system is a disaster.  There is no chance that Hillary would would care enough about fixing this system, and preventing or at least mitigating its destruction of generation after generation, to be willing to take on the ‘blob’…the teachers’ unions, the ed schools…these being key Democratic constituencies.  Also: the Democratic obsession with race/ethnicity has led to demands from the Administration that school disciplinary decisions must follow racial quotas.  Policies such as this, which would surely continue under a Clinton administration, make it virtually impossible for schools to maintain a learning environment for those students who do want to learn.

    The current state of K-12 education is a major inhibitor to social mobility in America.  Anyone who claims to care about the fate of families locked into poverty, while at the same time supporting a Hillary Clinton presidency, is either kidding themselves or straight-out lying.

    Read the rest of this entry »

    Posted in Academia, China, Civil Liberties, Civil Society, Economics & Finance, Elections, Politics, Russia, USA | 33 Comments »

    Cyber Warfare

    Posted by Michael Hiteshew on 5th June 2016 (All posts by )

    Col. Michael Brown, USMC, Retired:

    The Russians and Chinese are the most active in offensive attacks. I worry a lot about the vulnerability of our electrical grid and even our water supply network.

    SCADA Systems

    Supervisory control and data acquisition – SCADA refers to ICS (industrial control systems) used to control infrastructure processes (water treatment, wastewater treatment, gas pipelines, wind farms, etc), facility-based processes (airports, space stations, ships, etc,) or industrial processes (production, manufacturing, refining, power generation, etc).

    Posted in China, Energy & Power Generation, Military Affairs, Russia, War and Peace | 8 Comments »

    What is China’s Goal?

    Posted by Michael Hiteshew on 16th May 2016 (All posts by )

    In China Restructures for War we find that China’s armed forces have reorganized even while they continue a rapid upgrade in the quality of their weapons systems.

    China’s officially-disclosed military budget grew at an average of 9.8 percent per year in inflation-adjusted terms from 2006 through 2015, and Chinese leaders seem committed to sustaining defense spending growth for the foreseeable future.

    During 2015, the PLA continued to improve key capabilities that would be used in theater contingencies, including cruise missiles; short, medium, and intermediate-range ballistic missiles; high performance aircraft; integrated air defense networks; information operations capabilities; and amphibious and airborne assault units. The PLA is developing and testing new intermediate- and medium-range conventional ballistic missiles as well as long range, land-attack, and anti-ship cruise missiles, which once operational would extend the military’s reach and push adversary forces further from potential regional conflicts. China is also focusing on counter-space, offensive cyber operations, and electronic warfare (EW) capabilities meant to deny adversaries the advantages of modern, information technology-driven warfare.

    China has built a number of military outposts around the South China Sea, including Mischief Reef, Johnson Reef, Hughes Reef, Subi Reef, Cuarteron Reef, Fiery Cross Reef and Gaven Reef.

    Over the past 15 years, China’s ambitious naval modernization program has produced a more technologically advanced and flexible force. The PLAN now possesses the largest number of vessels in Asia, with more than 300 surface ships, submarines, amphibious ships, and patrol craft. China is rapidly retiring legacy combatants in favor of larger, multi-mission ships equipped with advanced anti-ship, anti-air, and anti-submarine weapons and sensors. China continues its gradual shift from “near sea” defense to “far seas” protection…

    In 2015, the PLAN’s first aircraft carrier, Liaoning, certified its first cohort of domestically trained J-15 operational pilots. The air wing is expected to deploy on the carrier in 2016. China also began construction of its first domestic aircraft carrier and could build multiple aircraft carriers over the next 15 years. Even when fully operational, Liaoning will not enable long-range power projection similar to U.S. NIMITZ class carriers. Liaoning’s smaller size limits the number of aircraft it can embark, while the ski-jump configuration limits aircraft fuel and ordnance loads. Liaoning will possibly be used for fleet air defense missions, extending air cover over a fleet operating far from land-based coverage. Although it possesses a full suite of weapons and combat systems, Liaoning will probably continue to play a significant role in training China’s carrier pilots, deck crews, and developing tactics that will be used with later, more capable carriers. 

    In his talk Chinese Views, Strategy and Geopolitics, Robert Kaplan sees China in the early 21st century as was the United States in the early 20th century, an emerging world military and economic power. In that respect, he says, China considers the South China Sea as the USA considers the Gulf of Mexico, a strategic naval zone it intends to dominate. With the Monroe Doctrine, the USA warned European colonial powers that the Americas were off limits to them, and with the Spanish American War the USA removed the last colonial influence and outpost from the region. We may see a similar attempt by China to remove American, Japanese, Philippine or any other influence or outpost from the South China Sea and possibly further.

    Perhaps most worrying, China is engaging in a prolonged domestic campaign of anti-American rhetoric and propaganda. The only possible purpose for that, from my point of view, is to ideologically prepare its populace for war. And seeing Glasnost as a dangerous example of a loss of political control leading to societal breakup, it is redoubling political conditioning in its military, including an expansion of political commissars and checkists inside the chain of command with a  purpose is to ensure ideological purity and loyalty.

    Military and Security Developments Involving the People’s Republic of China 2016

    Posted in China, Military Affairs, War and Peace | 39 Comments »

    Who is giving Apple legal advice?

    Posted by Mrs. Davis on 27th February 2016 (All posts by )

    The government is asking Apple to give it the password to Syed Rizwan Farook’s iPhone and iCloud account. Apple is refusing to do so based on its First Amendment rights. This seems to me to be a very weak argument. Just ask Judith Miller. And there really is very little difference. Apple will have to spend $100,000 to comply and all Judith Miller needed to do was name a source. But Apple’s case involves a national security threat to each and every American whereas Judith Miller’s involved only an implausible threat to Valerie Plame who chose to garner all kinds of media attention thereafter. If there were a safe deposit box the government wanted opened, it would go to a court and get an order for the bank to drill the locks out so that the box could be removed. The bank would comply. Apple will lose.

    And if Apple does not lose, the matter will go, as its pleading requests and as it may, even if it loses, now that Apple has made such a ruckus, from the fairly rational precincts of the judiciary to the fully irrational floor of the Congress. Let’s suppose that before legislation is completed there is another domestic terror incident in the US and the terrorist used an Apple iPhone. What kind of legislation would Apple get after that? While not yet widely known, Apple has likely put a back door into every Chinese iPhone via a Chinese designed chip added to the iPhone at China’s insistence for phones sold in the PRC. If this is confirmed, Congress would go even more non-linear.

    And what other things might the government do if Apple were to prevail? Well, in the extreme it could ask GCHQ or some other foreign service to crack the iPhone in general. No device is uncrackable. It could also signal the Chinese that it would not be aggressive in pursuing IP violations by China in the case of Apple products. Apple is refusing to cooperate with its government in the first responsibility of that government, to protect its citizens. There would be consequences. Is it really good legal advice to let your client take such risks?

    Apple should have quietly cut a deal with the government that would offer its customers the maximum security and quietly complied with court orders until a truly offensive order was received. Barring that, Apple would have a far better argument saying that ordering it to break its phones would lower their value to customers, lowering Apple’s revenues, and lowering Apple’s market cap. This would constitute an uncompensated taking by the Federal government of enormous monetary value from every Apple shareholder for which Apple should be compensated.

    With existing technology, you have no privacy. Products are in development that will allow retailers to know how long you look at an item on a shelf, if you pick it up, if you return it to the shelf, how long you look at it and if you buy it. And if you wear an iWatch or other wearable, it will know how much your pulse and bp increased at each step of engagement. If you use gmail, as almost everyone seems to, Google knows the content of every email you send and receive. Who is more likely to release or resell your email, Google or the FBI? The Silicon Valley forces lining up against the government are the most probable threat to what you think is your privacy. It’s been almost 20 years since Scott McNealy said “You’ve got no privacy. Get over it.”

    Apple will be made out to be protecting the ability of terrorists to communicate in secret. We are at war with these terrorists. They will kill any of us where ever they can. Article III, section 3 of the Constitution states,”Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort.” That sounds a lot like what Apple is seeking to do under protection of the first amendment’s emanations and penumbras.

    Tim Cook is engaging in the same kind of magical thinking that has dominated the boomer elite and led to so many tragedies for the last 24 years. Losing wars has consequences.

    Posted in Advertising, China, Civil Liberties, Current Events, Miscellaneous, Politics, Privacy, Tech | 60 Comments »

    Trump and China

    Posted by Michael Kennedy on 15th February 2016 (All posts by )

    sse-stock

    Trump has, famously, gone after China on its trade policy.

    In January 2000, President Bill Clinton boldly promised China’s inclusion in the World Trade Organization (WTO) “is a good deal for America. Our products will gain better access to China’s market, and every sector from agriculture, to telecommunications, to automobiles. But China gains no new market access to the United States.” None of what President Clinton promised came true. Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country.

    There is an interesting analysis of China’s stumbling economy in the Observer today.

    Here is a top ten guide for the perplexed.

    Central Planning: Central planning, central planning. The history of the abject failure the Soviet Union’s five-year plans should tell you everything. Command and control economies that report to one man (in a nation of 1.3 billion people) are doomed from the start. Top down economic decisions often look bold and start out highly stimulative, but then degenerate into inefficiency, waste, politics and fraud.

    Political Corruption: As the command and control economy generates liquidity, the demand and direction of the distributed capital becomes a political tussle. Decisions on how much steel, cement, coal, glass solar panels, high speed trains and shopping malls—in short everything—are not done in China as a cost benefit analysis by risk capital, a job difficult enough in itself. (Witness the capitalist economies’ booms and busts.) In China, this liquidity was allocated by political muscle, massive bribery and kickbacks, rather than economic justifications.

    Basic Gangsterism: Counterfeiting, knockoffs, copyright infringement, theft of intellectual property – these were a part of the booster rockets of China’s economic rise. It was all supposed to go away after China joined the WTO in 2001. It didn’t. It just became more institutionalized. Foreign companies needed Chinese “partners” in auto production, healthcare and technology. These “partners” crippled the potential productivity of the investments and led to frequent disputes and even more corruption… as in the GlaxoSmithKline scandals.

    There are a total of nine reasons, many addressed in Trump’s piece above.

    Now, the economy of China may be in free fall.

    Read the rest of this entry »

    Posted in China, Crony Capitalism, Politics, Trump | 5 Comments »

    Sic Transit Gloria China

    Posted by Grurray on 8th July 2015 (All posts by )

  • Shoeshine boy trading club, China chapter

  • There’s an old Wall Street legend about Joseph Kennedy, bootlegger and head of America’s original soap opera political family. At the height of the stock market mania in the ’20s, he received a stock tip from a shoeshine boy. It goes something like this:

    But the boy was not of the timid kind. “Oh yeah,” he yelled back at Kennedy, “well, I got a tip for you too: buy Hindenburg!” Intrigued, Kennedy turned around and walked back. “What did you say?” – “Buy Hindenburg, they are a fine company,” said the boy. “How do you know that?” –- “A guy before you said he was gonna buy a bunch of their stocks, that’s how.” – “I see,” said Kennedy. “That’s a fine tip. I suppose, I was a little harsh on you earlier,” he said, pulling off a glove and reaching in his side pocket for some change. “Here, you’ve earned it.”
     
    Little did the boy know that Kennedy, a cunning investor, thought to himself: “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.”

    This is supposedly how Joe avoided the financial ruin of the crash. He was probably too busy stockpiling whiskey to really care very much, but it does make for a good story.

    We’re reminded of this old saw today with some distant rumblings in the markets. Last week I was wondering what might cause our stock market to break out of its summer doldrums. Over the past few days we may have gotten the answer. While everyone was looking at the Greek crisis, China’s stock market has been crashing.

    The Shanghai Composite Index more than doubled in the last year up until a few weeks ago. All that time it was rising, economic reports indicated the Chinese economy was slowing. Since the peak in mid June, it has dropped over 30%. Last night it was down another 6%, and it would have been more if not for the Chinese government halting trading in most of the stocks. Bloomberg is reporting that Chinese regulators have banned major shareholders, corporate executives and directors from selling stakes in listed companies for six months.

    Investors with stakes exceeding 5 percent must maintain their positions, the China Securities Regulatory Commission said in a statement. The rule is intended to guard capital-market stability amid an “unreasonable plunge” in share prices, the CSRC said.

    This rule sounds like it’s meant to ban bigwigs and fatcats from bailing out on the economy. However, like Kennedy in the ’20s, all the big money already exited and left regular citizens holding the bag. The Chinese always had a high rate of savings, but recently they have been putting more of it into their stock market using margin to to double down on already precarious positions.

    Chinese brokers have extended 2.1 trillion yuan ($339 billion) of margin finance to investors, double the amount at the start of the year. But this often-cited figure is only part of the mountain of debt taken out to finance share purchases. Another 1.7 trillion yuan may have flowed into stock market investment from wealth management products, online lending sites and other sources, according to a Bloomberg survey of analysts.

    This was a good old fashioned bubble, and now it looks like it’s bursting. This will have repercussions all over the world. As of this morning, US stock markets are down over 1%. With the reliance of our industrial and financial industries on the hyper-interconnected global markets, this one probably won’t go down quietly.

    Posted in China, Economics & Finance, Markets and Trading | 21 Comments »