A series of well-researched articles by Charles Duhigg in the New York Times that included a long article on sweatshop subcontractors put Apple on the defensive. It appears that hard working people risk their lives to make sure that our iPads are shiny. Apple responded by asking the Fair Labor Association to investigate working conditions at its Chinese suppliers. Back home, Mike Daisey’s professional self-immolation magnified the controversy by forcing NPR to retract a series of assertions about Apple’s Chinese suppliers. This week, Apple CEO Tim Cook visited a huge Foxconn assembly plant in China as the FLA issued its report. Cook knows a lot about manufacturing both as a global supply chain expert and as a former factory worker.

Cook played the event perfectly. When the FLA reported that, shockingly, Chinese factory workers endure long hours for low pay, he promptly gave workers a raise by pledging to cut hours without cutting pay. The audience applauded, the curtain dropped, and the world returned to its apps.

The story displays a confidence and an ability to turn crisis into yet another advantage that makes me wonder whether we are approaching peak Apple. Apple raised Chinese wages not simply because it cares so much, but because it can afford to care so little. They know that their move causes bigger problems for their competitors than it does for them. Apple cares less about Chinese labor costs than Dell, HP, Google, and many others who produce lower margin products that use more Chinese labor. Apple spends about $8.25 per iPhone on Chinese labor – a completely irrelevant number in the lifetime economics of an iPhone. Had Chinese workers targeted Apple for a campaign to increase their wages, they would have chosen well.

Is Apple’s move good for Chinese workers? Sure — for some of them anyway. Apple’s decision does not mean that Chinese workers will necessarily take home more money — just that they will work fewer hours. This may not sit well with workers at Foxconn and other subcontractors, most of whom move from the countryside, live in company housing at the factory, and want to maximize their earnings, not minimize their working hours. Duhigg’s excellent reporting cited a factory where workers rioted when hours were reduced under pressure from a western customer, acknowledging:

The other (workers) we talked to all seemed to regard it as a plus that the factory allowed them to work long hours. Indeed, some had sought out this factory precisely because it offered them the chance to work more.”

Does China benefit from this decision? Not necessarily. Manufacturing jobs are declining China in favor of Vietnam and Cambodia (the great promise of the campaign this week by Nobel Peace Prize winner Aung San Suu Kyi is that Burma will attract urban factories to relieve the punishing life of rural peasants). It surprises many Americans to learn that manufacturing employment in China is actually declining. With the Apple settlement raising labor costs, peasants in adjacent countries can cheer: soon they too can trade in their hoes and hats for a white coats and the opportunity to polish iPads. Nobody said economic progress was beautiful.

Apple’s decision to polish its “Think Different” brand built on images of Ghandi and Cesar Chavez is tribute to both the company’s high moral tone and to it’s willingness to indulge the low economic literacy of its Western customers. Apple sells products to people who prefer a world in which every kid can go to college and work eight hour days. Apple customers hate sweatshops, even those that are demonstrable vehicles of economic progress. We have a hard time acknowledging that countries in South Asia, sub-Saharan Africa, or Haiti demonstrably need more sweatshops. We commit what economist Harold Demsetz memorably called the Nirvana Fallacy: we compare the choices facing overseas workers to the alternatives we have, instead of to the alternatives they have.

As economist Eric Crampton notes:

Harold Demsetz warned in a beautiful piece of economic writing back in 1969 against what he called Nirvana Theorizing. He said there that we can’t say markets fail just because they deliver outcomes that we don’t like; rather, we have to compare the outcomes of markets to real-world achievable alternatives. We can’t just assume Nirvana on the other side of the scale. And, most of the arguments against sweatshops effectively assume Nirvana on the other side: if only we were to ban sweatshops or, more realistically, impose bans on the import of products produced by sweatshop labour, the employees would suddenly be freed to pursue fulfilling careers or to go and get that Bachelor’s in Cultural Studies that they’ve always wanted….. It’s only the evil sweatshops that are keeping them from achieving their dreams.

If only it were that easy. For proper comparative institutional analysis, we really have to look at how working in a sweatshop compares with what else these workers could be doing.

Inconveniently for the Nirvana view, thousands of people voluntarily line up outside of Foxconn’s gates when factory jobs open up. Those clamoring to work at Foxconn know that factory work is tough and sometimes dangerous. But, like factory workers everywhere, they know that farm work is worse. The Times documented a horrific aluminum dust explosion in a Foxconn plant. This is not something to take lightly (my grandfather, uncle, and kid brother all died on the job or from occupational illness; occupational safety has never been an abstract problem to me), but the risks of factory work are nothing compared to the risk of illness (especially malaria), injury, or poisoning faced by Chinese peasants. Just about everyone who has tried both farm and factory prefers the latter. I worked in several factories; most of the jobs were boring and some were wildly unsafe (I thought for awhile that Westinghouse had a “hire the handicapped” policy because so many of my co-workers were missing fingers or limbs. D’oh). But two days spent harvesting hay under idyllic conditions hurt me worse than any factory job I ever did. Former paper and aluminum mill worker Tim Cook also understands this extremely well.

Crampton cites recent work by Benjamin Powell on standards of living associated with sweatshop work showing that in most of the countries he studied, the average wages were equal to or better than the national average. In poor countries like Cambodia, Haiti, Nicaragua and Honduras, sweatshops paid twice the national average. This is why countries like Bangladesh, where 80% of the population lives on less than $2 per day, need more sweatshops, not fewer. Crampton reminds us of Nick Kristof’s reporting on workers in a garbage dump in Phnom Penh. Kristof gets it:

Another woman, Vath Sam Oeun, hopes her 10-year-old boy, scavenging beside her, grows up to get a factory job, partly because she has seen other children run over by garbage trucks. Her boy has never been to a doctor or a dentist, and last bathed when he was 2, so a sweatshop job by comparison would be far more pleasant and less dangerous.

I’m glad that many Americans are repulsed by the idea of importing products made by barely paid, barely legal workers in dangerous factories. Yet sweatshops are only a symptom of poverty, not a cause, and banning them closes off one route out of poverty. At a time of tremendous economic distress and protectionist pressures, there’s a special danger that tighter labor standards will be used as an excuse to curb trade.

When I defend sweatshops, people always ask me: But would you want to work in a sweatshop? No, of course not. But I would want even less to pull a rickshaw. In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn’t the bottom.”

Tom Harkin, a progressive, pro-labor Senator from Iowa, introduced a law in Congress in 1992 that understandably prohibited the import of products made by children under age 15. In 1997, UNICEF investigated the effects of the Harkin Bill and found that even though the legislation had not taken effect, the mere threat had

“…panicked the garment industry of Bangladesh, 60 per cent of whose products — some $900 million in value — were exported to the US in 1994. Child workers, most of them girls, were summarily dismissed from the garment factories. A study sponsored by international organizations took the unusual step of tracing some of these children to see what happened to them after their dismissal. Some were found working in more hazardous situations, in unsafe workshops where they were paid less, or in prostitution.”

Once again, sweatshops are hardly the bottom of the heap — indeed the export shops targeted by Harkin are on average the better places to work. Most child labor is local production or rag picking, so if you ban exports, you may push some of the world’s most vulnerable children into the garbage dump, begging, child prostitution and starvation. This is not an argument for unfettered child labor or dangerous factories — just a note that exploitation is relative not absolute, protection is never free, and economic progress proceeds in steps not leaps.

Apple understands that paying slightly higher wages simultaneously pressures their competitors, appeals to western decency, and exploits economically ill-considered aversion to sweatshop labor. But in technology, companies with more competitive advantages than they can possibly exploit should worry about hitting their peak. Having watched first Microsoft and now Google decline after amassing what once seemed to be insurmountable advantages, it is time to ask whether peak Apple is now in sight?

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Apple, Google, and Microsoft are the three most important technology companies in the world and they  now mirror the world's three most important economies. Apple is China, booming but autocratic. Microsoft is Europe, wealthy, stagnant, and declining. Google is the USA, an immature but powerful force for freedom prone to arrogance and to fighting too many wars at once. 

The People's Republic of Apple

Communist China is arguably the most economically successful government in history, but their success came at the cost of severe limits on the lives of everyday citizens. Chairman Steve understands this formula completely. Anyone who studies the 20th century 200 years from now will learn about two things: the rise of China and Steve Jobs, the defining business leader of the modern era. 

Like the Chinese Communist Party, Jobs is all about control. He is considered autocratic even by those who respect his genius for reshaping markets with brilliant gadgets. He has always insisted on controlling every aspect of his customer's experience and on determining how customers will and won't use his technology. 

Shareholders and directors put up with it because they have little choice and because, like China, Apple delivers. Apple has a very small board that is selected and dominated by Jobs in a manner that would make a Chinese apparatchik proud. Apple gets away with it because they have gone from the least successful of the three companies to the most successful. In 2000, Microsoft was the most valuable company in the US, with a market cap of about $600 billion. Apple ranked #332 with a $16 billion market cap. Today, Apple is worth $210 billion and Microsoft $260 billion. Google is worth $178 billion. That kind of performance buys a lot of forgiveness from shareholders and appears to buy forgiveness from regulators as well. In no other American public company could the CEO step down for a liver transplant due a very serious medical condition and simply announce a "temporary medical leave" with no details. 

The forthcoming iPad will continue the tradition set by Macs, iPods, and iPhones. 

• It starts with developers. The Apple software development kit requires that developers agree to not disclose its terms. It requires that any software built using the SDK be sold only through iTunes — even if Apple rejects the product!

• The iPad will run only on hardware provided by Apple hardware. Apple has foolishly passed up a chance to kill Android by licensing the iPad OS to other hardware makers. It is built on a chip made by Apple (which they also won't license) and sold in stores run by Apple (also in Best Buy, a plus). 

• The iPad runs only apps approved by Apple (imagine Microsoft announcing that no Windows application could run without its approval). When Google built a breakthrough iPhone application (Google Talk), Apple simply disallowed it. Google has built a strong Gmail site for the iPad, but is unlikely to ever get a native app approved. Opera is about to submit a faster iPhone browser (the Mini) shortly and most people expect Apple to refuse to allow it to compete with Safari. Moreover, if Apple approves an application and later changes its mind, they simply remove it (as they did with dozens of adolescent T&A apps recently). 

• The iPad will not run Flash because The Great Helmsman has deemed it unworthy and prefers HTML5. 99% of sites that support motion use Flash? Tough — on the iPad, you get a broken screen. Why? Well, there are issues with Flash (but none so big that Android hasn't figured out how to work with them). There are even bigger issues with Jobs.

The message of the "I'm a Mac" TV ads says it all: Apple and Steve are too-cool-for-school and Microsoft (soon Google) are a bunch of portly losers in frumpy clothes who can't get a date.

How ridiculous is this? Today Business Week disclosed that developers who wanted a sample iPad to work with were forced to sign gag orders and to keep their iPads chained and locked in darkened rooms with the windows blacked out until the April 3 launch. There is secrecy, there is paranoia, and somewhere out past the far end of weird, there is Apple. At its height, had Microsoft even dreamed of such power, the world would have screamed.

Why do we put up with this crap? Because Apple technology is hella cool, of course. I can't wait for my iPad. Sure Apple's autocratic, vertically integrated approach to business should have gotten it kicked out of Silicon Valley a long time ago — but nothing succeeds around here like cool gadgets that sell like crazy and transform entire industries. 

Microsoft = Belgium

Unlike China, Europe is about security and stability, not control and growth. Taxes are high and technology innovation is low. Microsoft has gone European and looks more micro and more soft with each passing week. Hard to believe that only a year ago, Microsoft was still so feared that Apple and Google maintained an alliance to defeat it. Now, Microsoft looks like a large, quiescent beast that lives politely off of its legacy. Nobody is afraid of Microsoft — they are the Belgium of software. 

Microsoft, like the EU, is no weakling. It is a strong company with excellent technology that most people on most computers rely on every day. But the company is living on an installed base that is beginning to crumble as both system and desktop application software matter less and less. Like Europe, Microsoft leaves the new stuff to others. First they missed paid search. In sprinting to catch up, they missed smart phones. In sprinting to catch up, they look to miss tablets. They have defended their OS and desktop software so steadfastly that they missed apps and cloud-based software. Like Europe, Microsoft will be around for a long time — but it is a place where deaths exceed births, so decline is inevitable. 

Google: Which Witch? 

America is the much younger than either Europe or China and glorifies competition and innovation not for what it achieves, but as ends in themselves. At its best, the US is stunningly innovative and courageous, a beacon of freedom for others. At worst, the US takes on too many fights at once and is insensitive to how the world sees it. America is the planet's wild card — both Lincoln's "last, best hope of earth" and the Wizard of Oz, hoping desperately that Toto won't pull back the curtain. 

That's Google — idealistic, naive, brilliant, clumsy, and above all, astonished that major parts of the world fear and loathe it. 

Google enables millions of websites to monetize traffic and they enable millions of businesses to enjoy free, high quality web applications. ChromeOS is a breathtaking reconception of personal computing that Google plans to release into the wild, thus creating thousands of competitors for Microsoft and Apple. They have already done this with Android, which has created hundreds of competitors for the iPhone and iPad. Some of these are quite serious (check this i-Pad rival, a German Android tablet available now). Further, Google has taken a smart, highly principled position on Chinese censorship, unmatched by its rivals or by any other western corporation. 

But, like America, Google is prone to serious overreach. What other company cannot even count the number of products it offers? Google is fighting simultaneous, serious wars with the FTC over a major acquisition (AdMob), with the government of China over censorship, and with Apple over smart phones, patents, tablets, and a whole lot more. Google has made more enemies more quickly than either Apple or Microsoft — and that is not a record to envy. 

Google makes enemies easily. It pissed off handset makers when it brought out Nexus One, which is looking increasingly like a huge flop. Google competes in dozens of vertical markets in dozens of countries. If you are a media business, an advertising business, or any kind of information-based business, Google terrifies you, despite their white dresses and high pitched voices insisting that they are not evil. 

The company is voracious — they hire hundreds of smart people every day and acquire a new technology businesses every few weeks. In the last six months, they bought video compression company On2, reCAPTCHA, the clever security guys, AdMob, a mobile advertising leader, Gizmo5, a VOIP company and potential Skype competitor, Teracent a display ad business, AppJet, a real-time online collaborative editor, Aardvark, which does social search, reMail, a killer email app for the iPhone (now removed. Look for it in Gmail for Android)), Picnik, the best online photo editor (founded by a guy who already sold Google his first company), and DocVerse, which enables MS Office file sharing. That's their shopping list in the middle of a recession — and I probably missed a couple. There is a fine line between competitive and predatory, as the video below makes clear.

Over the long term, Google may turn out to be a force for good — but it is more likely to remain so if it has strong competitors. Fortunately, competition is something that all three companies have in abundance. Let's keep it that way.

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Whatever. It's a fine airport, but you have to clear customs after 14 hours in coach. There is a huge line of people in front of you and unsmiling communist bureaucrats grudgingly inspecting their passports.

Except that suddenly more officials appear — and they are smiling. And they are not acting like bureaucrats at all. They greet each passenger in their own language when they can. They have good technology — scan the passport and in you go. The lines move quickly.

Our 12 year old spotted what may be a critical part of their success. At each window sits a small feedback device that seems to ask "how am I doing?". You press one of four buttons: big green smile on the left, proceeding to small green smile, small red frown, or big red frown. That's it (for me anyway, since I don't read Chinese).

I would guess that a passport control official in Beijing might inspect 500 passports a day. If half of those folks give their feedback, then at the end of each month, 5,000 people will have given each official a quick bit of feedback. At the end of six months, I guarantee that you will see meaningful variations in how happy incoming visitors are with the first official to greet them. (I'd bet that there are none of these devices at the new Beijing train station, where an estimated 40% of Chinese are traveling to see family for New Years. which starts tonight. People jam into trains, as Jamie documents this in a cool slide show from the new Beijing train station here).

Do the data correspond with smiles? With efficiency? With "Thank You"? Or do passengers favor a smile from a cute faces (it cannot possibly hurt your score to be cute and smile). Or maybe (and this affected me) you are so happy to be asked your opinion of the service you smile, give the big green button a couple of smacks, and go on your way.

If so, the device could be adding value without collecting any actual data at all.

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A journalist once claimed that after a week in China he could write a book, after a month, he could produce a good article, but after a year he had nothing to say — so complex and layered was the country's economic, political, and cultural life. Unfortunately for pithy summaries, my recent visit to Beijing and Shanghai to check in on Jamie lasted only ten days. Commentary on my visit in two years ago is here.

I came home with more impressions than answers. Here are seven things I am watching in the year of the Ox:

1.  The calendar. There are several key dates coming up.

December 26 was the 115th anniversary of the birth of Mao Zedong. 15 years ago, the centenary was highly celebrated and even five years ago, there were official celebrations in several major cities. I expected to see some commemoration, some mention in the press of the birth of "The Great Helmsman".

So far as I could see, China did not celebrate Mao's birthday at all and when I mentioned it to locals, they shrugged it off. Have they figured out that the founder of their country was the greatest mass murderer of all time? Many scholars would place the count of his victims above 60 million. As fellow contender Stalin once noted however, "A single death is a tragedy. A million deaths is a statistic."

This lack of celebration is something to celebrate. Mao is now visible in China only on the currency and in the "Maosoleum" in Tienanmen Square (I love that Mao campaigned for all CCP leaders including himself to be cremated only to end up a textbook case of bad taxidermy). These days, many schools do not mention Mao until junior high. One textbook mentions Mao only in a section on manners (!!). Bill Gates literally gets more textbook time than Mao.

Well, progress is not always pretty. But it is progress.

What was celebrated everywhere with large exhibits and photos was the 30th anniversary of China's policies of “reform and
opening”, As with Mao, the actual history was more complicated than the Party's presentation of it. China's opening began before Mao's death but did not accelerate until Deng Xiaopeng came out of retirement in 1992 to deal Maoism a death blow. At that point the Party dismantled most of
the Maoist edifice, engaged in some land reform, attracted huge amounts of foreign capital, and most of all, encouraged private
enterprise. Today's posters suggesting that 30 years ago Deng put out a crisp and simple call for reform are misleading. It did not happen that way. 

Regardless, the Chinese have richly earned the right to celebrate. They have achieved the most astonishing economic transformation in
human history and you see it everywhere. China has lifted 200m out of poverty (some of them way out). The major cities feature amazing architecture. Schools are vastly improved, as is air quality in Beijing. Beijing and Shanghai feature beautiful new freeways and subways. A high-ranking city planner told me that Shanghai has begun construction on 500km of new subway line — that's 300 miles! The London subway system is the longest in the world. It is 250 miles long — and it took 75 years to get that way.

January 26th is the start of the Chinese New Year. This year however, a zillion migrants from the countryside will be hanging around in the cities (Beijing less — they scooted the hoi polloi out of town for the Olympics). Unlike in years past, many of these migrants are now unemployed as Chinese construction work and factory work has slowed dramatically. Fireworks are a certainty — and demonstrations a distinct possibility.

March 14 is the anniversary of the riots in Lhasa, Tibet. June 4th, is the the twentieth anniversary of the suppression of democracy Tienanmen demonstrations, June 22nd the tenth anniversary of the ban on the Falun Gong (credit these dates to The Economist).
Every leader in China knows that demonstrations are common in China and, as Maoist doctrine insists, "A single spark can start a prairie fire." We'll see.

October 1st is the 60th anniversary of founding of China. In Confucian tradition, 60th birthdays are particularly significant. The government will be tempted to put on a large celebration. Depending on the state of the economy and human rights, this may not be wise.

2, The Money
China enacted a massive $586 billion stimulus in November — a huge number relative to the size of their consumer economy. Even so, growth is widely expected to be 5% in 2009 — half of normal. The social consequences of this will be significant unless the recession is very brief. As in the US however, the stimulus the government provides may not be the stimulus the economy needs. If the government wants to convince rural Chinese to spend more and save less, it should improve land rights and provide a better health care safety net. No sign of this yet.


China used to overstate its national income accounts, but appears to have understated them in recent years due in part to trouble counting service sector output. Safe to assume that the next few years will see healthy growth reported from the government — so we need to watch trade, savings, and consumer data reported by companies and banks.

For example, power generation, tells a lot, and this is a generally more reliable number, It fell

by 7% in November vs a year ago. Trade figures showed China's exports 2% lower and imports 18% lower than a year ago. This shocks senior officials — if they even know about it.

3. The countryside. Improving the living standards of China or any other agrarian economy requires urbanization — the massive migration of peasants to cities. The Chinese Communist Party knows this and is terrified of it. The prospect of a rush of millions of peasants into the cities that are already struggling with social services is what keeps party functionaries awake at night. They want to manage the process carefully. If it starts looking unmanaged, watch out.

If peasants don't head for the city, they may become restive anyway. The economic contraction will hit them hard and Chinese farmers are unusually vulnerable to the  corruption of local party leaders and to environmental degradation. China's one child policy (which is a two child policy in the countryside) has made this problem worse, since many peasants now have less economic security due to smaller families.

4. The military.
During my visit, China sent naval forces outside the China Sea for the first time in modern history. The Chinese navy dispatched ships to deal with Somali pirates after Chinese merchant vessels came under attack. How ironic if Islamic pirates lead to a strengthening of the Chinese Navy, since they led to the creation of the US Navy and the US Marines (who sailed "..to the shores of Tripoli.." once millions of Europeans had been enslaved and bribes to Moorish pirates reached 20% of US tax receipts). If we are lucky, the Chinese will seize some pirate boats, execute their crews, and sink their ships. No law appears to prohibit this and it is the one remedy for piracy on the high seas that has proven historically effective.

The other reason that the military matters is that it is likely to grow in a recession (also true in the US). In China however, there is another force: demographics. China introduced its one child policy in 1979 and promptly experienced a significant gender imbalance as families preferred sons. This policy is complex and administered differently in different places (good discussion here) but according to a report by the State Population and Family Planning
Commission, there will be 30 million more men than women in 2020,
"potentially leading to social instability". One solution: a much larger permanent military. Which will, of course, look for things to do….

5. The young.
Youth culture in China is starting to take off in the arts, in poetry, and in a rising urban counterculture. Beijing and Shanghai have jazz, punk rock, and a few openly gay and lesbian bars.

Young people in China are as technology and internet saturated as their peers in the west (actually the Chinese now adopt  technology faster than Americans. The largest Apple store on the planet is reportedly in Beijing — where iPhones are ubiquitous, if still not authorized). Young people in China are different in one key respect however: they never go to movie theaters. Pirated DVDs sell everywhere for less than a dollar — why bother?

Young urban residence often speak good English. Urban China feels like Europe twenty years ago in this respect. Some have been educated overseas and have worked for US or Taiwanese companies. They understand deeply how western democracy, courts, and markets work. Many work for European or American companies and travel regularly. We visited a professional couple in Shanghai who we had not seen since they left California six years ago. Both spoke better English than when they left the US — because both need English in their jobs. This is not a huge group of people, but it is a very influential one.

6. The watchers
Not all change in China will come from the top — but a lot of it will. Government still manages media (most print and broadcast media these days are self-censored. Oddly, much of the actual censorship is now local, with the weird effect that journalists have a much easier time exposing corruption in other parts of China — censors only protect local officials. Great radio piece on this here.)

Government remains a huge economic player. As the Economist notes "State owned businesses dominate key sectors such as banking, telecoms, energy and the
media. Between 2001 and 2006 the number of these companies fell from 370,000 to
120,000, but this still left assets worth $1.3 trillion in state
control." Worse, many "private" businesses give Party and Army officials a piece of the ownership.This is bribery plain and simple — but it helps companies cut through a lot of truly red tape.

Chinese censorship remains a constant dance. While I visited, the New York Times was inexplicably blocked for a few days. The Huffington Post is always blocked — but the Economist rarely is. But if  you use the cellular network for internet access, nothing is blocked (but it is expensive). As China grows an educated, globally forward looking, technically sophisticated middle class, this censorship will create more and more friction — bet on it.

7. Obama
The relationship between US and China is arguably the world's most important bilateral strategic relationship. China is a superpower in training. It holds two trillion dollars of US debt. Were China and the US to cooperate fully on Iran, North Korea, or Darfur, we could make massive, positive, and rapid changes. Without such cooperation, these sores will continue to fester.

The creation of bilateral economic incentives to promote conservation, curb pollution, and reduce habitat destruction also requires US-China cooperation. Europe and Japan are increasingly green. The rest of the planet will either follow US-Chinese examples (south Asia, India, parts of the Middle East, South America, and Africa) or is too poor or poorly governed to contribute to environmental improvement.

Obama's first overseas trip will likely be to an Islamic country — ideally Indonesia (earth's largest Muslim population, a place Obama lived as a boy, politically open if not fully democratic). But once he is in the neighborhood, he should make a stop in Beijing. China may be an ox in a box, but it is a big ox and it is not in the box alone. Ours is a critical relationship and it would be smart to get it off to a good start.

photo credits: Jamie

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He is Jamie Manley, my oldest son and at 16, no longer a kid. During his freshman year in high school, Jamie studied Chinese history and seemed to like it.

He wanted to take Mandarin Chinese as a sophomore. Fine — after all, Mandarin is the world’s most popular language (English being fourth, after Arabic and Spanish, although people debate these things).

Perhaps ten months ago, Jamie announced that he wanted to move to China and spend his junior year in high school there. He was pretty sure there must be some way to do it.

Ahem. Gulp. A fifteen year old proposing to move out of the house right after he turns sixteen? 

Was he serious about moving to China before he got his driver’s license? While I thought about this development, his Mom said what I was thinking: “No way. You are not moving out at age 16. Forget it.”

Like most Dads, I make up the decisions about these things as I go along. I try not to have too many hard and fast rules, but one of my cardinal principles has always been to never, under any circumstances at all, mess with my kid’s dreams.

Clearly, Jamie had given this a lot of thought. We left it up to him to figure out and his Mom harbored hopes that his interest would fade. I never had a moment’s doubt that he would find a program, get admitted, and take off.

He left for Beijing last week.

We took a special vacation as a family just before his departure so that we could get a bunch of time with him. We were all a bit nervous the night before his flight, but we drove him to the airport, left him with a gaggle of anxious students and a few grown-ups who run his school.

Then he was gone.

I was sad beyond words to see him go. I walked into walls for about two days (as did he — but I wasn’t jet-lagged).

We knew he had arrived but had not heard much for about a week. Jamie’s school warned us that they (quite rightly) do not want him online, doing Facebook, or calling home often. This is not a trip, they reminded him. You have an amazing opportunity to live in China with a Chinese family. You not only get to learn Chinese, you get to learn about China. Get off the internet, jump in, and make the most of it.

Which makes perfect sense, except that I want to know what is going on with my kid (yeah, I know. I said he’s no longer a kid. Sheesh.) Where is he living? What is his Chinese family like? What is his school like? What is China like? How is he doing?

Before he left, Jamie set up a blog. I had urged him to do it, and frankly I didn’t know if he would actually write much. On the other hand, he is a terrific photographer, so I figured at least we’d see some good pictures. Before he left, he posted an entry on the Olympics and another on packing. We were delighted that he had posted a quick shot of his new family when he arrived.

Tonight however, he posted an amazing and extended account of his arrival and first few wide-eyed days in China. Once again, he did me proud. It turns out that the JamKid can blog. And really well.

Sample, from a trip to buy a bike in large Beijing department store:

The store had at least five levels, and sold everything from exotic fish to bicycles. There was food, household items, school supplies, electronics, movies, books –they had everything. The bike section was a few floors up and was situated in the corner of the store. The most common bikes were very utilitarian one speed bikes that can be seen all over Beijing.

Since the bike section was nowhere near an exit, I tested the bike by riding around the store (the school supplies section to be exact), weaving in an out of the aisles and trying my best to avoid shoppers. I can only imagine how I looked to spectators — a six foot tall white kid riding a bike around a Chinese superstore trying not to knock over the pens and notebooks.

Check it here — and bookmark his blog here. It will make for outstanding reading and will, if he keeps it up, document a year that will profoundly shape his life.

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Winchester majored in geology at Oxford and worked in the field for many years before turning to writing. His 2001 book The Map That Changed the World: William Smith and the Birth of Modern Geology is a fine treatise on a man whose world map revolutionized shipping, energy, religion, and science and inspired a young Charles Darwin as he sailed across the globe. Winchester followed with Krakatoa: The Day the World Exploded in 2003 – the colorful story of the largest volcanic eruption ever recorded. In 2005 he published A Crack in the Edge of the World: America and the Great California Earthquake of 1906. All three books are cogent history, good science, frequently funny, and in the case of the volume on Smith, compelling biography.

Winchester’s pair of books on the Oxford English Dictionary traces the impact of the
remarkable James Murray, effectively the author of the massive OED. The story, published in the US as The Professor and the
Madman, tells the story of Murray and of one of his most prolific
contributors, an American civil war surgeon, Dr. WC Minor, who,
unbeknownst to Murray, was convicted of murder in England and
authored more than ten thousand entries to the OED from his
book-lined cell in the Broadmoor Asylum for the Criminaly Insane. In
2003, Winchester followed this best-seller with The Meaning of
Everything – the Making of the Oxford English Dictionary. The first is
a classic must-read best-seller; I haven’t read the second.

Winchester has now also produced two excellent books on China. In 1996
he attempted to trace the headwaters of the Yangtze and to use his
journey to highlight the hidden history of the Middle Kingdom. The
resulting travel guilde summary of Chinese history, The River at the Center of the World: A Journey Up the
Yangtze, and Back in Chinese Time, was a great read, even if the premise of the book required a bit of upstream paddling If nothing else, the book confirmed Winchester’s gift for finding editors to send him on lovely trips. (National
Geographic commissioned him to visit each of the six major whirlpools
on earth. Nice work if you can get it!)

Just out and a wonderful summer read is The Man Who Loved China: The
Fantastic Story of the Eccentric Scientist Who Unlocked the Mysteries
of the Middle Kingdom — the life of Joseph Needham. Once again,
Winchester writes a definitive biography of an obscure and slightly odd
British scholar in order to tell a fascinating story.

Joseph Needham was a brilliant Cambridge biochemist. To this day he is
the only scientist ever awarded the Order of the Companions of Honour
by the Queen, and  elected by his peers as Fellow of both the Royal
Society and the British Academy. He married Dorothy Mary Moyle Needham,
also an accomplished biochemist, and also a Fellow of the Royal
Society, (they are the only married couple ever elected to this elite
institution of top scientists).

But the world will not remember Joseph Needham for his biochemistry. We
will will remember instead his work in an entirely unrelated field for
which Needham was untrained and uncredentialed. Needham is the author
of one of the most comprehensive and remarkable works of scholarship
ever published — The History of Science and Technology in China. When he
died in 1998, his "book" had become a multi-scholar project that had produced of seventeen volumes all overseen by Needham. It is now twenty-four.
The work has reshaped not only the West’s understanding of China’s
scientific and technological past — but China’s
understanding of its own history as well.

The research is stunning. Needham realized that Chinese scientists and inventors did not just
develop the compass, gunpowder, paper, and printing before the west –
they invented or discovered just about everything else as well,
from vaccines and tree grafting, coinage and hydrology, to deodorant
and toilet paper. The depth and breadth of Chinese
science and technology is utterly extraordinary — as is the mystery as to why the rate of
innovation in the west suddenly surpassed China’s, known today as "the Needham
question". And the discovery would not
likely have been made by an ordinary scientist.

But Needham was neither an ordinary scientist nor an ordinary human. He was a
hopeless polyglot. He prided himself a committed nudist and Morris
dancer (interests that he graciously pursued separately). He was a non-doctrinaire but nonetheless blinkered socialist (Mao Zedong and Chou Enlai happily exploited
Needham’s prestige for their own propoganda on more than one
occassion).

Perhaps most important, he was a man who effectively took two wives –
the distinguished colleague noted earlier and a graduate student named
Lu Gwei-djen, who anchored the remarkably open manage a trois for more
than fifty years. It was Lu who introduced Needham to China, taught him
to read, write, and speak fluent Mandarin, and collaborated with him on
his life’s most important work. Needham married Lu when Dorothy died (he was, after all, a devout Catholic).

During the second World War, Needham was sent by the British Society
and Churchill to give aid and comfort to scientists in "Free China". This gave Needham extraordinary license to travel
throughout any part of China not occupied by Japan. He was based in
Chongqing (today the largest city in China, with a population as big as California) but traveled very widely and under extraordinarily
difficult circumstances. Wherever he went, Needham met with scientists, ordered essential supplies for them from the UK, gathered
on the history of Chinese science and technology, and
shipped crateloads of books and documents back to Cambridge.

After the war, Needham devoted his life to his magnum opus, helped
found UNESCO (he is credited by many with putting the "S" in the UN’s
Educational, Scientific, and Cultural Organization), and somewhat blindly
promoted the Chinese Communist government (on occasion willfully
overlooking evidence of its brutality and economic failure). But his work has been universally acclaimed and seems likely to be consulted as long as the
OED or Smith’s maps for helping us understand that a great deal of the
science and technology that we take for granted came from China, not
the west.

Winchester loves China and clearly identifies with Needham as strongly
as he did James Murray and William Smith. Once again, Winchester’s research is extensive and
carefully documented, his story highly compelling, and his writing first rate. In
the end, I wish he had been able to shed more light on the Needham question — but
it is unfair to expect him to solve a riddle that eluded Joseph Needham
himself.

A fine read — highly recommended.

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• Is there an initiative to save the un-massacred remains of the
  people of Darfur? It will be met by a Chinese veto.. 

• Does anyone care
  about Robert Mugabe treating his desperate population as if it belonged
  to him personally? China is always ready to help him out. 

• Are the North
  Koreans starved and isolated so that a demented playboy can posture
  with nuclear weapons? Beijing will give the demented playboy a guarantee.

• How long can Southeast Asia bear the shame and misery of the Burmese junta? As long as the embrace of China persists.

• The identity
  of Tibet is being obliterated by the deliberate importation of Chinese
  settlers. 

• Mahmoud Ahmadinejad, a man who claims even to know and determine the sex lives of his serfs (by the way, the very essence of totalitarianism), is armed and financed by China. 

• .."when
  President Bill Clinton wanted the United Nations to take on Slobodan Milosevic and was stymied (by China, among others), and it was this way when President Bush asked the United Nations to live up to its resolutions on Saddam Hussein.

And now I hear human rights activists bleating about Burma and our inaction and simultaneously complaining about the only time that any U.S. president had the nerve to break the hold of China (and Russia, and sometimes France) on the possibility of
any international rescue.

.. If Beijing had had its way, Saddam Hussein would still be in power. Iran is being supplied with Chinese Silkworm missiles. Most horribly of all, China buys most of the oil of Sudan and in return provides the weaponry—and the diplomatic cover at the United Nations—for the cleansing of Darfur. ("Blood for oil" would be a good description of this bargain, though I have not seen the expression employed very often.)

Meanwhile, everybody is getting ready for the lovely time they will have at the Beijing Olympics. If there could be a single demand that would fuse almost all the human rights demands of the contemporary world into one, it would be the call to boycott or
cancel this disgusting celebration.

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Some of it is beside the point: regardless of your view of global warming, few thoughtful people think that carbon loading our atmosphere is something we want to keep doing for another century. Fewer still have any clear plan to stop. Three important ideas about global warming are often missing from these discussions.

First, reducing carbon pollution is an economic, scientific, and technological challenge not a moral or political one. This is not a battle of good vs. evil. Second, our approach needs to maintain a historical perspective. We have been wildly wrong about scientific findings in the recent past. This is not a reason to reject science, but is should be reason for caution — especially with regard to those who regard trade and technology as fundamentally damaging to the environment when commerce and scientific innovation have been the twin engines of global prosperity. Third, energy productivity is increasingly as important to the global economy and our planet as labor and capital productivity and can usefully be measured and improved accordingly. Accomplishing the same work with less energy is a big part of the solution since at present most of the energy we consume adds carbon to our atmosphere and we don’t have sufficient alternatives to carbon-based energy that are both economically attractive and politically acceptable to make a sudden and drastic shift in our sources of energy.

Economic Alternatives, Not Good vs. Evil

Media now fashions fears like it fashions clothes or music. Global warming plays on an irresistible combination of rich country guilt, anti-business chic, and vague beliefs about environmental degradation. The combination makes for a tempting religious crusade. The temptation is entirely misplaced — and the reverend Al Gore has done more than anyone to misplace it. (Comments on Gore’s delusional grandstanding here, here, here, here, and here).

Global warming is not a simple fight between black hats and white hats. Newsweek’s Robert Samulson points this out in a recent discussion of coal technologies. Coal is carbon and burning it provides about 40% of the world’s energy — placing coal at the heart of the global warming challenge.

Global warming has gone Hollywood, literally and figuratively. The script is plain. As Gore says, solutions are at hand. We can switch to renewable fuels and embrace energy-saving technologies, once the dark forces of doubt are defeated. It’s smart and caring people against the stupid and selfish. Sooner or later, Americans will discover that this Hollywood version of global warming (largely mirrored in the media) is mostly make-believe.

Most of the many reports on global warming have a different plot. Despite variations, these studies reach similar conclusions. Regardless of how serious the threat, the available technologies promise at best a holding action against greenhouse gas emissions. Even massive gains in renewables (solar, wind, biomass) and more efficient vehicles and appliances would merely stabilize annual emissions near present levels by 2050. The reason: Economic growth, especially in poor countries, will sharply increase energy use and emissions.

The latest report came last week from 12 scientists, engineers and social scientists at the Massachusetts Institute of Technology. Called "The Future of Coal,” the report was mostly ignored by the media. The report makes some admittedly optimistic assumptions: "carbon capture and storage” technologies prove commercially feasible; governments around the world adopt a sizable charge (aka, tax) on carbon fuel emissions. Still, annual greenhouse gas emissions in 2050 are roughly at today’s levels. Without action, they’d be more than twice as high.

Carbon capture and storage (CCS) is a bright spot: catch the CO2 and put it underground. On this, the MIT study is mildly optimistic. The technologies exist, it says. Similarly, geologic formations — depleted oil fields, unusable coal seams — provide adequate storage space, at least in the United States. But two problems loom: First, CCS adds to power costs; and second, its practicality remains suspect until it’s demonstrated on a large scale.

No amount of political will can erase these problems. If we want poorer countries to adopt CCS, then the economics will have to be attractive. Right now, they’re not. Capturing CO2 and transporting it to storage spaces uses energy and requires costlier plants. Based on present studies, the MIT report says that the most attractive plants with CCS would produce almost 20 percent less electricity than conventional plants and could cost almost 40 percent more. Pay more, get less — that’s not a compelling argument. Moreover, older plants can’t easily be retrofitted. Some lack space for additions; for others costs would be prohibitive.

To find cheaper technologies, the MIT study proposes more government research and development. The study’s proposal of a stiff charge on carbon fuel — to be increased 4 percent annually — is intended to promote energy efficiency and create a price umbrella to make CCS more economically viable. But there are no instant solutions, and a political dilemma dogs most possibilities. What’s most popular and acceptable (say, more solar) may be the least consequential in its effects; and what’s most consequential in its effects (a hefty energy tax) may be the least popular and acceptable.

The actual politics of global warming defy Hollywood’s stereotypes. It’s not saints versus sinners. The lifestyles that produce greenhouse gases are deeply ingrained in modern economies and societies. Without major changes in technology, the consequences may be unalterable. Those who believe that addressing global warming is a moral imperative face an equivalent moral imperative to be candid about the costs, difficulties and uncertainties.

Maintain Historical Perspective

Michael Crighton, who frequently comes in a close second in the science debates on global warming, makes a useful point nonetheless when he recalls that

In the first Earth Day in 1970, UC Davis’s Kenneth Watt said, "If present trends continue, the world will be about four degrees colder in 1990, but eleven degrees colder by the year 2000. This is about twice what it would take to put us in an ice age." International Wildlife warned "a new ice age must now stand alongside nuclear war" as a threat to mankind. Science Digest said "we must prepare for the next ice age." The Christian Science Monitor noted that armadillos had moved out of Nebraska because it was too cold, glaciers had begun to advance, and growing seasons had shortened around the world. Newsweek reported "ominous signs" of a "fundamental change in the world’s weather."

Back in the 90s, [much less in the Population Bomb 1970s, ed] if someone said to you, "This population explosion is overstated. In the next hundred years, population will actually decline." That would contradict what all the environmental groups were saying, what the U.N. was saying. You would regard such a statement as outrageous…. More or less as you would regard a statement by someone in 2005 that global warming has been overstated.

But in fact, we now know that the hypothetical person in 1995 was right. And we know that there was strong evidence that this was the case going back for twenty years. We just weren’t told about that contradictory evidence, because the conventional wisdom, awesome in its power, kept it from us.

Maintaining a historical perspective requires those who wish to reduce greenhouse gasses to respect the astonishing accomplishments of economic growth, technological change, and free trade — frequently overlooked or denounced by environmentalists. These forces have produced a planet that is healthier, wealthier and freer than ever before. Some perspective on the twentieth century from Indur Goklany, writing in Reason Magazine

..the 20th century saw the United States’ population multiply by four, income by seven, carbon dioxide emissions by nine, use of materials by 27, and use of chemicals by more than 100.

Yet life expectancy increased from 47 years to 77 years. Onset of major disease such as cancer, heart, and respiratory disease has been postponed between eight and eleven years in the past century. Heart disease and cancer rates have been in rapid decline over the last two decades, and total cancer deaths have actually declined the last two years, despite increases in population. Among the very young, infant mortality has declined from 100 deaths per 1,000 births in 1913 to just seven per 1,000 today.

These improvements haven’t been restricted to the United States. It’s a global phenomenon. Worldwide, life expectancy has more than doubled, from 31 years in 1900 to 67 years today. India’s and China’s infant mortalities exceeded 190 per 1,000 births in the early 1950s; today they are 62 and 26, respectively. In the developing world, the proportion of the population suffering from chronic hunger declined from 37 percent to 17 percent between 1970 and 2001 despite a 83 percent increase in population. Globally average annual incomes in real dollars have tripled since 1950. Consequently, the proportion of the planet’s developing-world population living in absolute poverty has halved since 1981, from 40 percent to 20 percent. Child labor in low income countries declined from 30 percent to 18 percent between 1960 and 2003.

Equally important, the world is more literate and better educated than ever. People are freer politically, economically, and socially to pursue their well-being as they see fit. More people choose their own rulers, and have freedom of expression. They are more likely to live under rule of law, and less likely to be arbitrarily deprived of life, limb, and property.

Social and professional mobility have also never been greater. It’s easier than ever for people across the world to transcend the bonds of caste, place, gender, and other accidents of birth. People today work fewer hours and have more money and better health to enjoy their leisure time than their ancestors….

Man’s remarkable progress over the last 100 years is unprecedented in human history. It’s also one of the more neglected big-picture stories. Ensuring that our incredible progress continues will require not only recognizing and appreciating the progress itself, but also recognizing and preserving the important ideas and institutions that caused it, and ensuring that they endure.

These historic accomplishments were hard won. (Some perspective from deep history: for 99% of mankind’s existence, our average life expectancy has been 18 years). Sadly, those who cannot recognize humanity’s gains cannot possibly defend them. The early stages of economic development often cause environmental deterioration as societies address basic human needs. Once people are fed, clothed, and housed and have access to health care, education, mobility, and energy environmental quality becomes a basic human need. When this happens, economic development and technological progress changes from becoming a source of environmental problems to a driver of environmental solutions. Notes Goklany

All of which is why we today find that the richest countries are also the cleanest. And while many developing countries have yet to get past the "green ceiling," they are nevertheless ahead of where today’s developed countries used to be when they were equally wealthy. The point of transition from "industrial period" to "environmental conscious" continues to fall. For example, the US introduced unleaded gasoline only after its GDP per capita exceeded $16,000. India and China did the same before they reached $3,000 per capita.

This progress is a testament to the power of globalization and the transfer of ideas and knowledge (that lead is harmful, for example). It’s also testament to the importance of trade in transferring technology from developed to developing countries-in this case, the technology needed to remove lead from gasoline.

This hints at the answer to the question of why some parts of the world have been left behind while the rest of the world has thrived. Why have improvements in well-being stalled in areas such as Sub-Saharan Africa and the Arab world?

The proximate cause of improvements in well-being is a "cycle of progress" composed of the mutually reinforcing forces of economic development and technological progress. But that cycle itself is propelled by a web of essential institutions, particularly property rights, free markets, and rule of law. Other important institutions would include science- and technology-based problem-solving founded on skepticism and experimentation; receptiveness to new technologies and ideas; and freer trade in goods, services-most importantly in knowledge and ideas.

In short, free and open societies prosper. Isolation, intolerance, and hostility to the free exchange of knowledge, technology, people, and goods breed stagnation or regression.

Despite all of this progress and good news, then, there is still much unfinished business. Millions of people die from hunger, malnutrition, and preventable disease such as malaria, tuberculosis, and diarrhea. Over a billion people still live in absolute poverty, defined as less than a dollar per day. A third of the world’s eligible population is still not enrolled in secondary school. Barriers to globalization, economic development, and technological change-such as the use of DDT to eradicate malaria, genetic engineering, and biotechnology-are a big source of the problem.

Moreover, the global population will grow 50 percent to 100 percent this century, and per capita consumption of energy and materials will likely increase with wealth. Merely preserving the status quo is not enough. We need to protect the important sustaining institutions responsible for all of this progress in the developed world, and we need to foster and nurture them in countries that are still developing.

A historical perspective also requires that we respect the profound limits on our ability to predict the future — especially if attempts to do this come at the expense of improving the present. A child is orphaned by AIDS every 7 seconds. Fifty people die of waterborne disease every minute. As I reported at the end of a long post here, investments in HIV/AIDS prevention, nutrients for the hungry, trade liberalisation, and malaria prevention all have immediate payback in saved human lives that vastly exceed any arguable expected value from investments in preventing global warming. I linked to the presentation by Bjorn Lomborg of the Copenhagen Consensus, and several of you thanked me for it. Here it is again — once again highly recommended.

Measure and Improve Energy Productivity

The third important idea is energy productivity, which turns out to be amenable to many of the same analytic tools used to measure and improve capital and labor productivity. This idea has been discussed in many places, but never perhaps as clearly as in a recent report published by the McKinsey Global Institute (MGI). MGI approached energy productivity as the ratio of value added to energy inputs, i.e., using the same definitions and tools that they have previously brought to highly insightful studies of global labor productivity. The report, authored by Diana Farrell, Scott S. Nyquist, and Matthew C. Rogers, notes that "Like labor or capital productivity, energy productivity thus measures the output and quality of the goods and services generated with a given set of inputs." For those keeping score at home, MGI advises that it today stands at $79 billion of GDP per quadrillion British thermal units (QBTUs).

Energy prices, business practices, market forces, and government policies all influence energy productivity. Japan leads the world here thanks to consistently high energy prices and strict government energy efficiency standards based on the best practices of leading companies. Japanese gas- and coal-fired power plants are 70 percent more energy productive than Russian ones, and Japan’s 2007 standards for room air conditioners are nearly 50 percent stricter than their Chinese counterparts. The Arab Gulf, by contrast, is among the least energy-productive parts of the world as a result of large, sustained energy subsidies and an energy-intensive growth model. Similarly, US cars are 15 percent less energy efficient than European ones in the same class, partly because European gasoline taxes are roughly seven times higher and partly because US regulatory exemptions have long helped automakers market SUVs as light trucks, which are subject to less stringent fuel-efficiency rules than passenger vehicles.

Economies can improve energy productivity two ways: by conserving energy (smaller or more efficient appliances or using more efficient energy sources), or by shifting to less energy-intensive businesses. Both matter, because that overall energy demand, which has increased by 1.6 percent a year for the past decade, is now on track to grow by 2.2 percent annually over the next 15 years. Improved energy productivity could achieve the same level of growth however, with only a .6 percent increase in energy usage.

The report poses the obvious question:

In view of today’s high oil prices, why haven’t companies and consumers already seized these opportunities? The answer is that systematic market failures involving consumers, businesses, and governments dampen the demand response to changes in price. Any effort to boost energy productivity must take these issues into account.

• Consumers, information, and capital. Most consumers lack information about the range of energy productivity improvements available to them, even though exploiting these improvements would serve their economic interests. Furthermore, to capitalize on energy productivity opportunities, consumers must often make up-front capital investments for which they have neither the funds nor the desire. Another issue, particularly in developing countries, is the fact that energy savings are often highly fragmented and their impact on household expenditures murky. As a result, the benefits of greater energy productivity are often obscured by the consumer’s focus on using energy for comfort, convenience, style, and health or safety. And since few consumers are willing to pay now for energy savings in the future, suppliers of energy-consuming products (such as cars and appliances) have less incentive to develop, produce, or market energy-efficient technologies and features.
• The relative unimportance of energy costs to business. Total US energy costs now represent less than 10 percent of the value of the output in all nonenergy sectors-indeed, less than 5 percent for most economic activities. Energy efficiency is thus typically a minor consideration, at most, when businesses invest in equipment such as automated- manufacturing tools or IT hardware. Many companies require a payback of three years or less (corresponding to an IRR of more than 30 percent) for capital expenditures to reduce energy consumption.
• Governments and subsidies. Energy productivity is systematically undermined by government policies. For starters, many developing-world industries that transform energy or use it intensively are state owned, which often reduces the financial incentives to improve energy productivity. What’s more, at least 20 percent of current global energy demand is subsidized or priced in a nonmarginal way, and both practices reduce or eliminate incentives to use energy as productively as possible. These energy-distorting policies include fuel subsidies in oil-producing countries in the Middle East and elsewhere, a lack of metering for the gas used in Russia’s homes (setting energy’s marginal cost at zero), and widespread energy subsidies for state-owned enterprises. Not surprisingly, energy efficiency in these areas lags behind global best practice dramatically.

The report rightly calls for governments to remove subsidies that discourage energy productivity and to use building codes and appliance-efficiency standards to promote more efficient heating and lighting. They note that codes and standards are help address what economists like to term an "agency" problem in the building construction: "builders of offices, apartments, and homes often have little incentive to focus on energy efficiency, because the potential occupants may be reluctant to spend more now for a building that promises energy savings in the future". The report calls for innovative companies to create sales terms, "perhaps developed through collaborations between utilities and the companies that sell the relevant technologies", to make energy efficient solutions more economically attractive.

Legislation is a more complex topic. Fuel standards and taxes can promote energy productivity but subsidies and loopholes offset much of these gains. The US declares most SUVs to be light trucks and exempt from fuel efficiency calculations. We subsidize ethanol, which contributes little to progress against global warming, but it wins a lot of votes in the Iowa caucuses. (The problem with ethanol is that the energy returned on energy invested for ethanol is close to 1, which means that it takes nearly as much energy through natural gas based fertilizers, farm equipment, transformation from corn or other materials, and transportation to create ethanol as the ethanol itself produces when put to work).

On balance, there are several steps that make immediate sense. Conservation programs work and are economically straightforward. California, which embraced conservation efforts seriously a generation ago is now about twice as energy efficient as the rest of the country, even adjusting for our weather. Government tax credits can reduce the ten year paybacks on some technologies that become cheaper with scale (notably home solar, which is now cheap enough that folks pitch the panels and installation as you enter our local Costco). CAFE standards are important as are gasoline taxes. Countries with $4/gallon gas use fuel more efficiently and send less money to the Middle East than we do. Fine with me if we reduce income taxes to offset gas or carbon taxes — this is not an argument for larger government spending, just an argument that there is no such thing as cheap oil.

Many of the technologies that will wean us from carbon-based energy are still in development. Green technologies are at the moment receiving hundreds of millions of dollars of venture capital and are the source of an entire sector of startups. Many of these startups are located in Silicon Valley, where the air pollution comes increasingly not from crowded freeways, but from China. Others are located elsewhere. Suntech Power Holdings is one of the ten largest makers of solar panels in the world and intends to become the world’s low cost producer of photovoltaic solar power. Suntech went public on the NASDAQ last December; its shares are up more than 70% since the IPO. The company’s headquarters? Wuxi, China.

      Technorati : Global warming 

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Chinese Communist Party chief Hu Jintao has vowed to "purify" the Internet …describing a top-level meeting that discussed ways to master the country’s sprawling, unruly online population. Hu made the comments as the ruling party’s Politburo — its 24-member leading council — was studying China’s Internet, which claimed 137 million registered users at the end of 2006.

OK, so 10% of China is now online. And the Communist Party is going to do what to keep them all in line?

…he made it clear that the Communist Party was looking to ensure it keeps control of China’s Internet users, often more interested in salacious pictures, bloodthirsty games and political scandal than Marxist lessons.

The party had to "strengthen administration and development of our country’s Internet culture", Hu told the meeting on Tuesday, according to the official Xinhua news agency.

"Maintain the initiative in opinion on the Internet and raise the level of guidance online," he said. "We must promote civilized running and use of the Internet and purify the Internet environment."

Why are all dictators delusional?

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