China


Chemotherapy is a process I term ‘differential death’. Powerful poisons are administered to the body in hope that cancer cells are killed off either preferentially or at a higher rate than healthy body cells, albeit with the understanding that a certain amount of healthy cells will die during the process. Chemotherapy works only when there exists some finite difference between the growth of the cancer and growth of healthy cells that can be exploited.

In the following arguments, I assert some premises which I believe are supported by observation. One of these premises is that the Government of the United States includes some people who are very intelligent and very clever, despite the obvious inanity of the politicians. Pare away the first layer of politicians, the Congress, the executive branch, and their support ,and there are groups of people who have a very detailed and complete understanding of the various processes occurring in the world. There are also ‘think tanks’ whose stock in trade are ideas, plans and processes, most of which are vetted very thoroughly.


In the recent economic turmoil, the Federal Open Market Committee (The ‘Fed’) made certain statements, raised interest rates multiple times, and even manipulated the acquisition of Bear Sterns. It opened its discount window, once only available to regulated entities such as banks, to unregulated financial firms. While this was hailed as good in the first few instances, as the rates were lowered again and again, voices began to be heard suggesting that the Fed’s monetary policy was in error. In the aftermath of Bear Sterns, more and more editorials in the Wall Street Journal began to address the ‘moral hazard’ of making such liquidity available; the ‘moral hazard’ of Congresional action on bailouts of mortgage companies who made questionable loans; and the decline of the dollar worldwide. Since food commodities and oil are predominately denominated in dollars, the result of the weak dollar has been a run up of commodity prices. The restrictions on investment resulting from the ‘mortgage crises’ generated large amounts of liquidity that would have gone into SIVs and CMOs, but instead went into commodity speculation, exacerbating already high commodity prices.

Yet the ‘Fed’ does nothing. The White House talks about the global significance of a ‘strong dollar’ yet does nothing. The Treasury Secretary makes strong dollar statements one day and recants them the next. What is going on here? These are, in fact, some of the previously mentioned intelligent and clever people. If the news commentators, abjuring their fascination with Amy Winehouse, or other pop-tart-du-jour, can see and comment on the effects of a weak dollar, then it should be blindingly obvious to even politicians.

These events did not occur in a global vacuum. Let’s look at a few of the boundary conditions. China is a developing economy whose growth is poised at double digits. China’s labor markets provide US companies with a means of inexpensive labor for manufacturing. As a result, China sells an enormous amount of goods to the US. While China’s trade balance sheet is balanced insofar as imports and exports, the balance in trade with the US greatly favors exports. Further China is “The Middle Kingdom”, whose negotiation policy is “You give me this, and I’ll take that”. Repatriating profits from a business venture in China is tantamount to impossible. The only way to successfully do so is to create a Chinese corporation with a Chinese national, route the profits to this new corporation and purchase something from a party in which you, the original company, have an interest. Chinese economic development officials are literally dumbfounded at the concept that you, as a businessman, would not want to leave your money in China. China is about dominance and about regaining their (largely hypothetical) position as the Middle Kingdom: the number one military, industrial and political entity of the world.

The US buys goods from China. In return, China obtains a large amount of US currency. Money which is stationary is useless, so China uses this source of funds to invest in various opportunities including those in the US, buying US Treasuries. China also invests in other financial instruments which are dollar denominated. China is also gowing, and uses a significant amount of energy resources. This creates a huge demand for oil and other ‘portable’ sources of energy. Finally, China has a political system which favors central control which makes its responses a tad arthritic.


Economic inequity has been a casus beli for as long as man has existed. So if one were to fight a war with a major power, how would one go about it? Iraq is not a major power. Success in the war in Iraq under whatever one wants to characterize as success, can be obtained through force of arms. Similar arguments can be forwarded for most of the medium sized countries, but the real question is how does one wage war on a China, or a Russia. Even smaller countries such as Venezuela and Iran, due to their economic coupling, cannot be warred upon by force of arms. This is especially true for those countries with their own capable militaries and those with strategic nuclear weapons.

To successfully challenge China, Russia, Iran or Venezuela, they must remain unaware that the war is even being fought.

The United States is by far the most dynamic economy of the world. In its normal course of business, hundreds of companies are created and destroyed each year, with novel companies rising to the top of the capitalization structure in fields which didn’t exist even as much as five years ago. Companies providing basic commodities adapt or are driven under by the competition. A 20% bear market drop in the Dow represents the GDP of almost half of the rest of the world. The markets have legacy sayings — Wall Street sneezes and the rest of the world gets the flu.

So if, by analogy we view the United States as the body and the influence of China as malignant cells, how can we wage war to eliminate this influence. Strangely enough, depressing the value of the dollar is one very astute way. The results of this particular brand of chemotherapy is already showing results. Yes, it’s painful, and yes we are losing our hair, but as a result of the rise in commodity prices, business in China is becoming unprofitable. Even Wall-Mart is reconsidering its manufacturing operations there. Manufacturers, faced with shipping costs that are three to four times the production cost in China, have to sell at markups to cover these costs. It becomes cheaper to manufacturer the products here in the United States. Factories which were moth-balled are being re-opened. It is estimated that the current shipping and energy costs amount to an 9% tarrif on Chinese goods.

The rise of dollar denominated oil has forced China to finally raise its subsidized fuel price to its population by 18%. This has an immediate adverse effect on economic growth which is propelled by both energy and capital. And the Chinese citizens who worked their way to the middle class only to find their manufacturing jobs eliminated, become a burden and place demands for a support net on the government. More money flows into social security and less into the military. And the present value of the investments China has placed in US Treasuries and financial institutions is dwindling. The capital investments they do have are decreasing in value both due to inflation and exchange rates. China has recently allows its currency to increase with respect to the dollar in response to this. This only further makes its products less competitive. So as long as the US can withstand the pain of the chemotherapy, China’s influence will lessen.

While the main force of this attack I believe is China, a more subtle attack is being waged on Saudi Arabia and Russia. This attack consists of inflating the incomes of these countries beyond their ability to control. Saudi institutions like KAUST reflect the belief that money can buy prominence in research and technology, as well as stability and respect. Enormous sums are being spent in developing universities with the belief that a religiously restrictive and closed society can become host to a modern research institution. What both Saudi Arabia and Russia don’t understand is that the wealth and power of the United States is not in its things but in its attitudes, freedoms and optimism. When the price of oil falls, as it must, programs in these countries dependent on this cash flow will cease to function. Chavez in Venezuela is spending his oil revenue on vote buying social programs and doing little to build his country’s infrastructure. When the revenue is no longer there to support the programs, they too will cause more problems for Chavez than the United States ever did.

So as long as we can take the pain and adjust a little, we can limit the influence of the cancer. After all, hair can grow back. America needs to see to the aspects of our society that allow this to work — that is creativity, flexibility, inexhaustible energy and freedom.

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Pity poor George W. Bush. Already under fire from some quarters for his decision to attend the Olympic Games in Beijing, he drew more fire for keeping his harshest words for China out of his speeches in Beijing, and more fire still for being in Beijing and “out of the loop” for the sudden Russian invasion of Georgia. For many, just more proof that W is a bumbling fool.

But in reference to both China and Russia, it’s really Bush’s foes who are foolish, and W who really understands what is needed. Whether we like it or not, the world is currently geopolitically divided into four power blocks: the United States, Russia, China, and everyone else. The European Union and Japan can compete economically (though each is less of a competitor than either seems to realize) but lack any credible military power projection. The rest of the world may have armies, but has neither the economic might nor the infrastructure to really project them. Like it or hate it, at the present time the US really only has two rivals for hegemony: Russia and China.

And since 1972, the United States has conducted a long, slow, steady dance which has slowly but steadily transformed the People’s Republic of China from an insular, xenophobic rival into an engaged, cosmopolitan economic partner. The PRC remains an autocratic state run by a cabal which can be brutal but which, increasingly, hides its iron fist in a velvet glove. Most importantly, the PRC’s leadership has adopted a nearly explicit bargain with its people: in return for your obedience we will deliver you prosperity. This means that the PRC has little choice but to grant a growing class of wealthy capitalists and prosperous businessmen increasing freedom of action. While these classes may be largely apolitical, they will make increasing demands for their own personal, economic, and social freedom. And the Chinese will have to either deliver or watch the prosperity they need vanish.

Sadly, since 1992, Russia has taken an opposite course: clawing its way out of Communist tyranny only to fall into the worst excesses of kleptocracy and crony capitalism. As China has been building economic freedom, Russia has been reducing it—limiting wealth and influence to a tiny class of criminal overlords and political cronies. And while the Chinese leaders increasingly choose to conceal their true power, Vladimir Putin has been steadily accumulating the trappings and practice of the Czars of old. And now, at long last, he has taken up the favorite Czarist pastime: gobbling up vulnerable neighbors on the most transparent of pretenses.

Unfortunately, much as we might like to, we simply can’t afford to meet such Russian aggression openly on the battlefield. Any large direct confrontation between American and Russian forces must result in either many, many Russian soldiers killed by American weapons or vice-versa. And that means that in any such confrontation, the specter of nuclear retaliation cannot be avoided. No matter how unlikely, the very thought of nuclear escalation must give us pause, especially against someone with Putin’s sociopathic patterns. Yet we cannot allow Russia to simply crush sovereign nations without limit or reprisal.

So the Administration’s strategy of avoiding rattling the saber in favor of threatening credible economic and political reprisals makes sense. As does the Administration’s willingness to allow the Russians to save face after what was, after all, a profoundly stupid move by the Georgians. And a move done in clear opposition to the consistent advice and counsel of the United States. No matter what provocations Russia engaged in—and the evidence is building that they all but directed separatist attacks—Georgia’s overwhelming military response targeting Russian “peacekeepers” directly was the worst possible response. And one which greatly limited American ability to back the Georgians.

But, as long as Russian aggression can be contained by a strong and unified stance by the US and its allies, then in the long run, Russia is the less important concern. Drunk with oil profits, and headed by a burgeoning Napolean, Russia is an important short-term threat. But it is also an aging nation with a declining population, crumbling infrastructure, and rampant corruption. In the long run, it is energetic China, with its huge population, exploding economy, and tremendous optimism which will be the great rival or the great partner of the United States. Bush can’t afford to ignore or underestimate Russia, but he knows that China deserves the greater attention.

The greater attention, and the greater respect. China remains a nation with oppressive laws, cavalier treatment of certain basic human rights, and problematic limits to the rule of law with respect to senior government and military officials. But it has also made almost unbelievable strides in a very short time. Beijing in 1988 was not a place many Westerners, much less many businessmen, would have chosen to live in. Beijing in 1998 had seen vast improvement, but still had much to do. The Beijing of 2008 has become a vibrant place of commerce, prosperity, and genuine cosmopolitan life. The limits on personal freedom remain, but have become largely unimportant for daily life: more Singapore than Communist China. Serious problems remain, but the urban centers of China of today are far more similar to those of Korea or Japan than most would have predicted even a decade ago.

So W was right when he expressed his strategy to Bob Costas in a brief, but frank interview. To influence China we must remain engaged with China. And to remain engaged with China, we must show clearly that we respect China and her recent accomplishments. To be sure, we must continue to use that relationship to urge reform and liberty, but we don’t have to slap the Chinese in the face during their big moment. Instead, we can do exactly what W did: call clear attention to the problems but keep the greater focus on the positive changes in China and the decades-old Sino-American relationship that has helped to produce them.

This is a special section of the 12 Angry Men Blog where we celebrate the best Troll to be found anywhere during the past week. While there are many varieties of troll, ranging from the fuzzy-haired dashboard decorations to the waylayer of the Billy Goats Gruff, we enjoy a well-executed jabbing that leaves an adversary stammering for a response. Any moron can produce a flame—mere sewage dumped upon the city square—but to produce a good Troll is a work worthy of the celebration of men.

The Troll of the Week segment will be written frequently enough to be termed “periodic”, but the actual label “of the week” is merely idealistic ambition, and it is not to be taken seriously.


This week’s winner of Troll of the Week is going international. A first for us here at the angry man blog. We wish to recognize an individual who has truly gone were no troll has gone before… bringing the wonderful world of internet insults mud-slinging, and occasional respondent legal ramifications (not to mention threats of physical harm) to the heart of a community of monks.

Context of the Troll:
China and Japan have long been natural enemies at the best of times and hostile beyond human capacity at the worst. Tensions between the two nations have been strained over the past 60 years, as China feels that Japan has not been suitably apologetic for atrocities committed during the Second World War. This also makes China a bit temperamental about anything seen as overtly aggressive or militaristic in Japanese behavior. One issue that typical meets these criteria is the realm of Martial Arts. Both nations hold powerful national pride attached to their homegrown fighting styles.

Execution of the Troll:
Last week an internet user identified only as “Five Minutes Every Day” posted a comment on the “Iron Blood Bulletin Board Community”. In his post he claimed that a Japanese Ninja visited The Shaolin Temple to challenge the monks there to combat and that the monks with their Kung Fu were unable to defeat the Ninja.

“The facts that the monks could not defeat a Japanese ninja showed that they were named as kung fu masters in vain.”

The entire Chinese nation was outraged, and the monks, eager to defend their honor quickly took action. That is correct, they got a lawyer and are suing the post’s author. Wait you say? A lawyer?!? This can not be Grasshopper!!! No cryptic Kosh-esque statement about the truth pointing to itself, or understanding being a three edged sword?!? No Caine/Master Po wisdom about patience and harmony?!? While the story could be completed right then and there, as most such stories would, it in fact continues on in its hilarity.

The author had written the post in an attempt to satirize the monastery and its head monk for not living up to the ideals and image that they foster and perpetuate (most notably that the order’s leader has his own chauffeur driven car). In a supreme irony, the monks response essentially proved his point, while at the same time demonstrating that same decadent legalism that China vilifies the West for. A two for one deal; not bad “Five Minutes Every Day”. Though trolling a bunch of monks, nay the Shaolin Temple itself, is worthy of song and herald into the halls of the legendary trolls, this was still not yet enough for “Five Minutes Every Day”. These statements led to the following responses which only serve to hurt the position of those making them:

“The so-called defeat is purely fabricated, and we demand the Internet user to apologize to the whole nation for the wrongs he or she did,” -Lawyer for the Shaolin Temple, cited in the Beijing News

Yes, yes, we all know how they feel about free speech in China. For crimethink they would love to make “Five Minutes Every Day” an unperson.

“It is not only extremely irresponsible behavior with respect to the Shaolin temple and its monks, but also to the whole martial art and Chinese nation” -Shaolin Monks cited in Beijing News

Is this a bad time for a “my kung fu is better than your’s” comment?

In a fantastic one-two combo troll, the author used a favorite troll tactic and posted a fake apology/second troll:

“What I wrote was fiction. I apologize to Shaolin Temple and all my readers….I hope that the Shaolin masters will exercise their Buddhist compassion and virtue, and forgive me. Thank you very much.”

“..Buddhist compassion and virtue, forgive me.” Classic, simply classic, way to subtly insult while on the surface back pedal and all the while maneuver them into a corner that they must accept the half-assed fake apology to save face. I owe you a beer!

Here is hoping that the Ask a Ninja is looking forward to killing the Shaolin lawyer soon. Mc Shaolin, it seems that you have met your match in the keyboard warriors. Long live the parody and comedy. I personally vote for Chuck!

Internetz Honor

For this inspired troll, “Five Minutes Every Day” is awarded the coveted Troll of the Week, and will receive an honorary beer at the Man Lunch. In addition to beer I personally owe you for the entertainment you offered. Any Shaolin Monks wishing to sue “Five Minutes Every Day” for the honor of said beer might find that once done, this beer much like their actions would then be without honor.

…and the interpreter replied—No

Have you ever seen the joke where two businessmen, an American and a Chinese are working out a deal with the assistance of a Chinese interpreter? The American businessman asks a question which gets interpreted through a great and lengthy process involving multiple conversations, a lot of symbolic writing on the palm of the hand, and many looks of consternation. After several minutes the interpreter turns to the businessman and simply says “no” —which is the answer to the question. While humorous, this is in fact a real phenomena as anyone attempting to do business in China can attest.

What we have here is a failure to communicate—not between the American businesman and the Chinese businessman, but between the interpreter and the Chinese businessman.

A little background is in order. China is a large country aggregated from multiple totally indigestible chunks–even for a maw as large as the Chinese Communist Party (CCP). There are two major languages, Cantonese and Mandarin, which are essentially incompatible with Cantonese having 9 tonal variants and Mandarin four. Within China it is estimated that there are over 200 dialects of Mandarin alone. Plus there are other essentially separate languages used in the autonomous regions.

A person from the north Chinese province of Xisang has little chance of being understood by someone from Shanghai. What is actually occurring in the parable above is that the two Chinese are attempting to converge concepts so that they may actually communicate.

When each draws on his hand, he’s referring to Chinese characters, each a symbol for a concept and each mnemonically stable over the various dialects. Once the question is properly framed, the answer become possible to elucidate.

As a result, ideas, innovation and commerce tend to be predominately local. However, there are a great many Chinese, even in a local area bounded by dialect. From outside this looks like either a great untapped market or the scariest thing since Japan reinvented the transistor radio. More optimistic (or scared) Westerners look at local markets and say things like

Oh Shandong Province has 90 million people, I can extrapolate this market to the entire Chinese population and get numbers in the potential billions of customers.”

.. or

This group in Shanghai is innovating like crazy. What the hell happens when the rest of the country does the same.”

A more astute observer wonders whether the people of China can become the engineering and dynamic powerhouse of the 21st Century when they cannot even talk to each other. The CCP has taken notice of this and has mandated that Mandarin be taught as the common language. Dialects are still a major problem.

And then there is the written language which resembles the paths of an ink-dipped drunken rooster. On the plus side, (upon further reflection) since it’s derived from pictograms, it’s stable across all these various dialects and languages. On the minus side, building vocab requires learning an ever increasing set of new characters. By some estimates, a minimum of 5000 symbols are required for family level discourse. 20,000 are required for an educated Chinese to read a newspaper on the level of the New York Times. To read the Wall Street Journal from front to back: 50,000-70,000 symbols. A paper in computer science or biotechnology has symbol sets in the 100,000 range per discipline. Cross-discipline or interdisciplinary research is off to a crashing halt—you need to learn the discipline specific set for yours and the additional set of your coworker. So basic research has a chance— integrated applications —eh—not so much.

Stangely enough, the common language (with its attendant symbol set) for engineering and research is de facto becoming English. Mandarin is not particularly suited for engineering and science as it forces both sides of the brain to work. Chinese learn English if they are going to be doing science and engineering because to not learn English is the equivalent of clamping on concrete overshoes at the start of a 100 meter race.

Enter St. George.

This gives the Western world a unique opportunity. In order to promote Democracy is China, we have only to insert some “viral memes”, perhaps as English ‘borrow words’. The French are always complaining about how English is tainting their ever-so-pure language, so let’s do it on purpose with the Chinese. Some of this is already happening—witness the CCP’s attempt to restrict Google search engine output, or restrict what terms are available in Microsoft Office’s built-in lexicon. The Western world should make every attempt to load up the scientific and technical disciplines with dual use connotations for essential engineering concepts. The CCP still views politics as independent of science and technology—a glaring flaw in their world view, as it is the free exchange of ideas that promote advancement in science.

The CCP’s position is essentially self-defeating anyway. What absurdity prompts them to sponsor thousands of students to Western Colleges where they learn the language, absorb and train in the technology; and yet expect them not to be exposed to democracy? The CCP will either have to allow the nasty democratic connotations or disallow English.

If they do the latter, they are hobbled and Chinese hegemony is no longer a threat—it becomes in fact a paper dragon. If they do the former, we also win, as the concepts the CCP wants to suppress are put to use, leading to increased awareness of the benefits of democracy and economic freedom.