Economics & Finance

Mini-Book Review — Midler — Poorly Made in China

by

Midler, Paul, Poorly Made in China: An Insider’s Account of the Tactics Behind China’s Production Game, John Wiley 2009, 241 pp.

Paul Midler began his academic career in Chinese history and literature and then went to Wharton for an MBA and further graduate work in East Asian business. Fluent in Chinese, over the past ten years he spent his time in southern China working as a consultant to American importers and was witness to the economic boom that’s amazed the world.

This book, however, is about all the other things he witnessed … the methodical transfer of technology and profit to Chinese manufacturers and the methodical transfer of risk, liability, and innovation/marketing/design costs to American companies. “Poorly Made” is a master class in how ill-equipped American companies are to operate in “low circle of trust” cultures … even when those American companies are managed by savvy mercantile clans and even organized crime!

Read more

Volitional causation versus systemic analysis

by

Neither in his theory of economics nor in his theory of history did Marx make end results simply the carrying out of individual volition, even the volition of elites. As his collaborator Friedrich Engels put it, “what each individual wills is obstructed by everyone else, and what emerges is something that no one willed.” Economics is about the pattern that emerges. Historian Charles A. Beard could seek to explain the Constitution of the United States by the economic interests of those who wrote it but that volitional approach was not the approach used by Marx and Engels, despite how often Beard’s theory of history has been confused with the Marxian theory of history. Marx dismissed a similar theory in his own day as “facile anecdote-mongering and the attribution of all great events to petty and mean causes.”
 
The question here is not whether most intellectuals agree with systemic analysis, either in economics or elsewhere. Many have never even considered, much less confronted, that kind of analysis. Those who reason in terms of volitional causation see chaos from conflicting individual decisions as the alternative to central control of economic processes. John Dewey said, “comprehensive plans” are required “if the problem of social organization is to be met.” Otherwise, there will be “a continuation of a regime of accident, waste and distress.” To Dewey, “dependence upon intelligence” is an alternative to “drift and casual improvisation” – that is, chaos – and those who are “hostile to intentional social planning” are in favor of “atomistic individualism.”

Thomas Sowell, Intellectuals and Society

Quote of the Day

by

We must think things, not words, or at least we must constantly translate our words into facts for which they stand, if we are to keep to the real and the true.

Oliver Wendell Holmes, Jr., Law and Science and Science and Law, 12 Harv.L.Rev. 443, 460 (1889).

Senator Dodd’s Bill for the Establishment of an Oligarchy

by

This may seem slightly redundant, in light of David Foster’s post below which inspired me to post this on my own blog, but Lexington Green strongly felt that the point could stand repeating ( or shouting from the rooftops). So, here goes:

Senator Chris Dodd (D-Connecticut) is working hard in Washington…. to make sure that only those who are already Rich and Powerful will have a shot at being rich and powerful.

Read more

Complete Economic Madness

by

Democratic Senator Christopher Dodd wants to impose some changes on the way that financing for new ventures works in America:

First, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

Here’s Keith Rabois, an early PayPal employee who is now a VP of Slide and an angel investor:

Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?

Numerous other comments from investors at VentureBeat. (link via Power and Control, who adds comments of his own)

Note that while government seeks to protect individuals without a certain level of assets & income from participating in the economically-essential and often profitable activity of venture investing (even though some of these individuals may be highly sophisticated in their understanding of finance and of the relevant markets), it also seeks, via elaborate advertising campaigns, to lure people of all income levels–in practice, especially the poor–to “invest” their money in state lotteries.

Disclosure: I have investments in venture capital.