Chinese Communist Party Archives Reveal Contradictions, Confusion, and Corruption in “Reform” Policies

(p. C3) Up until the Covid pandemic, I spent years traversing the country to explore the Chinese Communist Party archives from the reform period. Access was at times surprisingly easy, and my findings were eye-opening.

. . .

The archives suggest that officials were aware of reform’s contradictions from its earliest days. Remnants of the command economy combined with what one economist called “selected, pasteurized, partial, truncated, restricted and disjointed pieces of market and private property policy.” The outcome, said Liu Guoguang, a professor of economics and alternate member of the party’s Central Committee, was “a confused economic system.”

Private ownership of intellectual property had no place in this system, and its theft was actively encouraged throughout the party hierarchy. Two government ministries jointly circulated a directive on counterfeiting in 1983, noting that due to the country’s legal obligations, it was necessary with such goods to “change the name of the product.” As one report noted, “We need a unified approach towards copying” so that “the quality of the copied equipment can be guaranteed.”

The counterfeiting of computer technology assumed particular importance after Zhao Ziyang, the country’s premier from 1980 to 1987, read “The Third Wave,” by the American futurist Alvin Toffler. The book predicted that, in the wake of the agricultural and industrial revolutions, a third revolution would be based on the computer. In October 1983, Zhao proposed skipping the second wave altogether: “Time and tide wait for no one, opportunity knocks but once,” he pronounced. To leap into the digital era, China would need to imitate and reverse engineer foreign products.

But the copying wasn’t limited to computer technology. By 2001, China was awash in fake pharmaceutical products and pirated Hollywood movies on DVD. China’s accession to the WTO that year led to a bonanza of copying, for which few consumers paid more than ordinary Chinese: Electric kettles blew up, brake pads failed. Spices contained paraffin wax, noodles used a red dye that caused cancer, and rice wine was made with cheap industrial-grade alcohol. In 2007, the government estimated that one-fifth of the food and consumer goods it checked were substandard or tainted.

China’s financial system rested on similarly shaky foundations. By the summer of 1988, the pace of growth led to double-digit inflation, and state banks were unable to pay villagers for their contractual deliveries of grain, cotton and other essential products. Protests in 1989, in Tiananmen Square and elsewhere across the country, were as much about economic as political discontent. About a fifth of the files in the party archives deal with debt—lending to solve the debt, further debt due to the lending, more lending to solve an even larger debt.

. . .

The image that emerges from the archives is very different from the impression that many have of today’s China. From a distance, the country’s gleaming cities may resemble an impressively shipshape tanker, with the captain and his lieutenants standing proudly on the bridge, but below deck, sailors are desperately pumping water and plugging holes to keep the vessel afloat.

For the full essay, see:

Frank Dikötter. “China’s Economic Miracle That Wasn’t.” The Wall Street Journal (Saturday, November 19, 2022): C3.

(Note: ellipses added.)

(Note: the online version of the review has the date November 17, 2022, and has the same title as the print version.)

The essay quoted above is adapted from Dikötter’s book:

Dikötter, Frank. China after Mao: The Rise of a Superpower. New York: Bloomsbury Press, 2022.

Russian Soldiers See Free Ukrainians Flourish

(p. A18) In early April [2022] I walked into Andriivka, a village about 40 miles from Kyiv, with my battalion in the Ukrainian territorial defense forces. We were among the first Ukrainian troops to enter the village after a Russian occupation that had lasted about a month. . . .

The Russians killed civilians in Andriivka, and they ransacked and looted houses. The locals told us something else the Russians had done: One day they took mopeds and bicycles out of some of the yards and rode around on them in the street like children, filming one another with their phones and laughing with delight, as if they’d gotten some long-awaited birthday present.

A few days earlier we were in Bucha, a suburb northwest of Kyiv that was subjected to an infamously brutal occupation. The people there told us that when the first Russian convoy entered the town, the troops asked if they were in Kyiv; they could not believe that such idyllic parks and cottages could exist outside a capital. Then they looted the local houses thoroughly. They took money, cheap electronics, alcohol, clothes and watches. But, the locals said, they seemed perplexed by the robotic vacuum cleaners, and they always left those.

One resident, who told me that she was taken hostage by the Russian soldiers in her house, said they could not get over the fact that she had two bathrooms and kept insisting that she must have more people living with her.

This war is Vladimir Putin’s fatal mistake. Not because of economic sanctions and not because of the huge losses of troops and tanks but because Mr. Putin’s soldiers are from some of the poorest and most rural regions of Russia. Before this war, these men were encouraged to believe that Ukrainians lived in poverty and were culturally, economically and politically inferior.

. . .

Ten years ago Ukrainians could drink beer with Russians after the European Championship soccer matches, but we didn’t realize then that Ukraine was moving forward and Russia was moving in the opposite direction. Ukraine was trying to build a path to freedom, and Russia was building a path back to the Soviet Union with Kremlin TV and petrodollars.

For the full commentary see:

Yegor Firsov. “Russian Troops See That Ukrainians Live Better Than They Do.” The Wall Street Journal (Wednesday, Aug. 24, 2022): A18.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the commentary has the date August 23, 2022, and has the title “Ukraine’s Russian ‘Liberators’ Are Seeing That We Live Better Than They Do.”)

Miami Mayor Welcomes Private Enterprise with Public Safety, Low Taxes, and Few Regulations

(p. A15) On one side, we have the socialist model: high taxes, high regulation, less competition and declining public services with government imposing itself as the solver and arbiter of all social problems. On the other side, we have the Miami model: low taxes, low regulation and a commitment to public safety and private enterprise. The models present a stark choice on issues ranging from personal freedom, economic opportunity, public safety and the role of government.

. . .

In Miami, many residents have personally experienced the socialist model along with its symptoms of hyperinflation, class resentment and stagnant growth. Four years ago Miami residents elected me to pursue a different path. We reduced taxes dramatically, and our revenue base doubled. We invested in our police, and our crime rate dropped. And last week we reduced taxes to their lowest level in history—cutting costs for residents and promoting economic growth.

Miami is a place where you can keep what you earn, invest what you save, and own what you build. We are meeting the high demand of rent costs by encouraging public-private partnerships, activating underutilized land through zoning reforms, and harnessing free-market forces to build more. It works, and our new residents from New York and California can confirm it.

For the full commentary see:

Francis X. Suarez. “Miami Takes On the Socialist Model.” The Wall Street Journal (Monday, Aug. 22, 2022): A15.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date August 21, 2022, and has the same title as the print version.)

“Maverick” Chinese Entrepreneur Zhou Hang Dares Criticize Zero Covid Policy

(p. B1) China’s entrepreneur class is grappling with the worst economic slump in decades as the government’s zero Covid policy has shut down cities and kept would-be customers at home. Yet they can’t seem to agree on how loudly they should complain — or even whether they should at all.

. . .

Their approach, the equivalent of an ostrich sticking its head in the sand, doesn’t make sense to Zhou Hang. Mr. Zhou, a tech entrepreneur and a venture capitalist, has questioned how his peers can pretend it’s business as usual, given the political and economic upheaval. Stop putting up with the ridiculous reality, he urged. It’s time to speak up and seek change.

Mr. Zhou is rare in China’s business community for being openly critical of the government’s zero Covid policy, which has put hundreds of millions of people under some kind of lockdowns in the past few months, costing jobs and revenues. He’s saying what many others are whispering in private but fear to say in public.

“The questions we should ask ourselves are,” he wrote in an article that was censored within an hour of posting (p. B4) but shared widely in other formats, “what caused such widespread negative sentiment across the society? Who should be responsible for this? And how can we change it?”

He said the lockdowns in Shanghai and other cities made it clear that wealth and social status meant little to a government determined to pursue its zero Covid policy. “We’re all nobodies who could be sent to the quarantine camps, and our homes could be broken into,” he wrote. “If we still choose to adapt to and put up with this, all of us will face the same destiny: trapped.”

. . .

Mr. Zhou, 49, is known as a maverick in Chinese business circles. He founded his first business in stereo systems with his brother in the mid-1990s when he was still in college. In 2010, he started Yongche, one of the first ride-hailing companies.

Unlike most Chinese bosses, he didn’t demand that his employees work overtime, and he didn’t like liquor-filled business meals. He turned down hundreds of millions of dollars in funding and refused to participate in subsidy wars because doing so didn’t make economic sense. He ended up losing out to his more aggressive competitor Didi.

He later wrote a best seller about his failure and became a partner at a venture capital firm in Beijing. In April [2022], he was named chairman of the ride-sharing company Caocao, a subsidiary of auto manufacturing giant Geely Auto Group.

A Chinese citizen with his family in Canada, Mr. Zhou said in an interview that in the past many wealthy Chinese people like him would move their families and some of their assets abroad but work in China because there were more opportunities.

Now, some of the top talent are trying to move their businesses out of the country, too. It doesn’t bode well for China’s future, he said.

“Entrepreneurs have good survivor’s instinct,” he said. “Now they’re forced to look beyond China.” He coined a term — “passive globalization” — based on his discussions with other entrepreneurs. “Many of us are starting to take such actions,” he said.

For the full story see:

Li Yuan. “A Solitary Critic on ‘Zero Covid’.” The New York Times (Saturday, June 11, 2022): B1 & B4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date June 10, 2022 and has the title “A Chinese Entrepreneur Who Says What Others Only Think.”)

Regulations Hurt Immigrant Home Cooks in Gig Labor Market

“In the kitchen of her apartment in Green point, Brooklyn, Juliet Achan stirs up dishes from her Surinamese background.” Source of photo: online version of the NYT article cited below. Source of caption: print version of the NYT article cited below.

(p. B1) Several days a week, Jullet Achan moves around the kitchen of her apartment in Greenpoint, Brooklyn, stirring up dishes from her Surinamese background: fragrant batches of goat curry, root vegetable soup and her own take on chicken chow mein.

She packages the meals, and they are picked up for delivery to customers who order through an app called WoodSpoon.

“Joining WoodSpoon has made a huge difference during the pandemic, giving me the flexibility to work safely from home and supplement my income,” Ms. Achan said in a news release from the company in February.

However, in the state of New York, there are no permits or licenses that allow individuals to sell hot meals cooked in their home kitchens. And WoodSpoon, a three-year-old start-up that says it has about 300 chefs preparing foods on its platform and has raised millions of dollars from investors, including the parent company of Burger King, knows it.

“It’s not legally allowed,” said Oren Saar, a founder and the chief executive of WoodSpoon, which facilitated the interviews with Ms. Achan and other cooks. “If someone is on our platform and they’re selling food they cooked in their own kitchens, that’s against our platform policy. But, to be completely honest, we think that those rules are outdated.”

Ms. Achan said she had become aware from her own research that cooks were not allowed to sell foods cooked in their homes, but said she continued to do so. “The food needs to be prepared in a clean kitchen, and it needs to be done correctly,” she said. “I’ve been cooking for my family for years, and that’s how I prepare meals for my customers.”

. . .

(p. B4) Legislation was introduced last year that would allow individuals to sell hot meals from their own kitchens, but it is still pending.

Mr. Saar said WoodSpoon, which started in 2019, couldn’t wait for the laws to catch up when the pandemic hit. “With Covid and all of the people who were reaching out to us to work on the platform, all of the people we thought we could work with, it was not right for us to wait to launch,” he said.

He estimates that 20 to 30 percent of the chefs on the platform are using licensed commercial kitchens, meaning the bulk are not. He said WoodSpoon helped home cooks obtain the proper permits and licenses, provided safety training and inspected the kitchens, but ultimately the onus is on the individuals selling on the platform to follow the proper rules. A spokesman later added in an email that the company was working to make commercial kitchens available to its chefs.

“We are ahead of the regulators, but as long as I keep my customers safe and everything is healthy, there are no issues,” Mr. Saar said. “We believe our home kitchens are safer than any restaurants.”

When asked if WoodSpoon would remove any chefs it knew were cooking from kitchens in their homes, Mr. Saar demurred, saying, “It was a good question.” He noted that many of WoodSpoon’s cooks prepared and sold foods on social media and competing food platforms, like Shef.

For the full story, see:

Julie Creswell. “Illegally Delicious. Probably.” The New York Times (Monday, April 18, 2022): B1 & B4.

(Note: ellipsis added.)

(Note: the online version of the story has the date April 10, 2022, and has the title “The Home Cooks (and Start-Ups) Betting on Prepared Meals.”)

Private Sector Scores 10 Points Higher Than Government on Customer Experience Index

(p. A4) . . . the government customer experience has improved over time. Federal agencies and programs in 2021 earned an average score of 62.6 points out of 100 in the Customer Experience Index, an annual ranking produced by Forrester Research Inc. The score was the highest federal average the market research company reported since it began studying government in 2015.

But the federal customer experience average still lags 10.7 points behind the private-sector average on the Forrester index.

“There have been people in the federal government doing good [customer experience] work for years,” said Rick Parrish, vice president and principal analyst at Forrester. “The problem is the improvements haven’t been big enough, or fast enough.”

For the full story, see:

Katie Deighton. “Bureaucracy Studies Why It’s So Frustrating.” The Wall Street Journal (Wednesday, April 20, 2022): A4.

(Note: ellipsis added.)

(Note: the online version of the story has the date April 19, 2022, and has the title “White House Presents Plan to Fix Federal Customer Experience.”)

In 2020, After Deploring “Dark Money,” Democrats Spend $600 Million More Dark Money Than Republicans

(p. 1) For much of the last decade, Democrats complained — with a mix of indignation, frustration and envy — that Republicans and their allies were spending hundreds of millions of difficult-to-trace dollars to influence politics.

“Dark money” became a dirty word, as the left warned of the threat of corruption posed by corporations and billionaires that were spending unlimited sums through loosely regulated nonprofits, which did not disclose their donors’ identities.

Then came the 2020 election.

Spurred by opposition to then-President Trump, donors and operatives allied with the Democratic Party embraced dark money with fresh zeal, pulling even with and, by some measures, surpassing Republicans in 2020 spending, according to a New York Times analysis of tax filings and other data.

The analysis shows that 15 of the most politically active nonprofit organizations that generally align with the Democratic Party spent more than $1.5 billion in 2020 — compared to roughly $900 million spent by a comparable sample of 15 of the most politically active groups aligned with the G.O.P.

For the full story, see:

Kenneth P. Vogel and Shane Goldmacher. “Denouncing Dark Money, Then Deploying It in 2020.” The New York Times, First Section (Sunday, January 30, 2022): 1 & 22.

(Note: the online version of the story has the date January 29, 2022, and has the title “Democrats Decried Dark Money. Then They Won With It in 2020.”)

Hong Kong’s “Unofficials” Begged Britain to Bargain Better with Beijing’s Communists

(p. C4) In the 1980s and 1990s, the political scientist Steve Tsang conducted dozens of interviews with industrialists, bankers and lawyers appointed as unofficial members of Hong Kong’s Legislative Council or Executive Council. Known as the “Unofficials,” they were advisers to the British government. The British Official Secrets Act prevented them from speaking about the negotiations during their lifetimes, but the interviews restore a vital, often anguished Hong Kong voice to the historical record.

. . .

The Joint Declaration provided for Hong Kong to be handed back to China in 1997 with its capitalist system intact and a Chinese pledge that its way of life should continue for 50 years. Hong Kong was to hold elections for its Legislative Council and chief executive, but there was no clear timeline for democracy or mechanism to ensure Chinese compliance. “If we cannot devise the right political system, then Hong Kong may not survive,” Chung warned, telling the British that “the Chinese concept of an agreement was worthless.”

Thatcher’s response to them, in January 1984, was frosty: “The Chinese could walk into Hong Kong at present but had not done so. We had to negotiate with the cards that we possessed.” . . .

In June, Chung traveled to Beijing with two other Unofficials to express their concerns directly to Deng Xiaoping: that in the future Hong Kong might be governed from Beijing instead of being administered by Hong Kongers; that Chinese officials might not accept Hong Kong’s lifestyle; and that China’s future leaders might follow “extreme left policies.”

. . .

Would it have made any difference if more attention had been paid to the Unofficials? In 2019, as protests roiled the city, I put this question to Hong Kong’s last governor, Chris Patten. “I think it might have done, actually,” he said. He recalled that British policy in the 1980s “was driven by officials with only the most vestigial, shadowy input from ministers. The Cradocks and others, they didn’t listen to people in Hong Kong. They knew what Hong Kong required, and what Hong Kong, they thought, required was whatever would be acceptable with China for a quiet life.”

The dominant narrative in the British press in the run-up to the handover in 1997 was one of an honorable retreat. The Unofficials tell a different story: One of political expediency that set in motion the foreseeable—and foreseen—unraveling of one of the world’s greatest cities.

For the full essay, see:

Louisa Lim. “The Unofficial Story of the Handover of Hong Kong.” The Wall Street Journal (Saturday, April 23, 2022): C4.

(Note: ellipses added.)

(Note: the online version of the essay has the date April 22, 2022, and has the same title as the print version.)

The essay is adapted from Lim’s book:

Lim, Louisa. Indelible City: Dispossession and Defiance in Hong Kong. New York: Riverhead Books, 2022.

Sugarman Spent $500,000 in a Losing Fight Against a $100,000 FTC Fine

(p. A12) Though many of his wackier ideas bombed, Mr. Sugarman came up with a big winner now and then, including pocket calculators in the early 1970s and his BluBlocker sunglasses, designed to filter out ultraviolet and blue light waves, starting in the 1980s.

. . .

Trouble came in 1979 when the Federal Trade Commission accused him of violating a rule requiring firms to send out mail-order items promptly or notify customers of delays. Mr. Sugarman said the delays were caused by blizzards and a computer breakdown. The FTC proposed a $100,000 fine.

Mr. Sugarman counterattacked with a pamphlet, “The Monster That Eats Business,” an indictment of the FTC illustrated with cartoons in the style of Mad magazine. He accused FTC officials of hounding him over trivial lapses. After six years of fighting, he agreed to a settlement requiring him to pay a fine of $115,000 over four years. Mr. Sugarman said he had spent $500,000 on legal fees and added that “we are completely innocent of the charges.”

The success of BluBlocker sunglasses dug him out of that hole. Mr. Sugarman had a home on Maui, where he published a weekly newspaper. He flew small airplanes. He drove a Ferrari Testarossa. He looked dapper in his BluBlockers.

For the full obituary, see:

James R. Hagerty. “Marketing Guru Survived His Flops and Found Hits.” The Wall Street Journal (Saturday, April 2, 2022): A12.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date March 29, 2022, and has the title “Marketing Maverick Survived Flops, Found Hits.”)

Large Retailers Chartered Ships to Avoid the Most Crowded Ports

(p. A1) Global supply-chain delays are so severe that some of the biggest U.S. retailers have resorted to an extreme—and expensive—tactic to try to stock shelves this holiday season: They are chartering their own cargo ships to import goods.

Port delays, Covid-19 outbreaks and worker shortages have snarled the flow of products between Asia and North America, threatening the supplies of everything from holiday decorations and toys to appliances and furniture. It is taking roughly 80 days to transport goods across the Pacific, or twice as long as before the pandemic, retail and shipping executives said.

Walmart Inc., Home Depot Inc., Costco Wholesale Corp. and Target Corp. —some of the biggest U.S. retailers by revenue—are among the companies that are paying for their own chartered ships as part of wider plans to mitigate the disruptions, a costly and unattainable option for most companies.

For the full story, see:

Sarah Nassauer and Costas Paris. “Retailers Charter Ships to Ensure Supplies.” The Wall Street Journal (Monday, October 11, 2021): A1 & A6.

(Note: the online version of the story has the date October 10, 2021, and has the title “Big U.S. Retailers Charter Private Cargo Ships Amid Port Delays.”)

Could Principled Investors Make the Walt Disney Company Great Again?

Robert Nozick defended firms that maximize profits subject to ethical side constraints. Presumably the ethical side constraints include not capitulating to totalitarian governments that suppress free speech. The recent “meme” investors in GameStop and AMC sparked in me the question whether principled investors loyal to ethical side constraints could return the Walt Disney Company to the principled greatness of Walt Disney, the man?

(p. 1) It has been a year since Mat Bowen, who was the pastor of a small church in Gibson City, Ill., had the dream — the one where Elon Musk, the head of Tesla, urged him to buy Dogecoin.

Mr. Bowen had just begun to dabble in investing. He soon discovered WallStreetBets, the online forum on Reddit where throngs of small investors were plotting to buy shares of GameStop, the troubled video game retailer, in a bid to teach Wall Street a lesson. Some hedge funds had bet that shares of GameStop would fall. Instead, they took off, as the investors banded together last January to drive the price up more than 1,700 percent.

Caught up in the frenzy, Mr. Bowen bought GameStop, too. In July [2021], he quit the church to become a full-time trader, convinced he was joining a fight against financial injustice.

The beliefs underpinning last year’s meme stock phenomenon are stronger than ever. For a large number of individual investors, the stock market has become the battleground on which they join forces to right perceived wrongs and fight the powerful. So much so that when the stock market seesawed this past week, many small investors were undeterred. Falling prices were another opportunity to buy more shares of their favorite companies.

“The reason I am still in this, and the reason I am willing to ride these stocks to zero, is for my fellow citizens,” said Mr. Bowen, who received his master’s degree in divinity (p. 7) at the Princeton Theological Seminary. He cast the so-called meme stock fight in moral terms. “The battle of good versus evil is not just limited to the walls of a church or a synagogue or a mosque,” he said.

. . .

Jesus Gonzalez was drawn into the meme stock trade by what he saw as a power imbalance. Mr. Gonzalez, 22, had invested in stocks off and on as a teenager, but “AMC and GameStop are different from any other play in the stock market,” he said. “We have never seen a congregation of retail investors who have collectively come together on the internet and formed the largest, most powerful decentralized hedge fund in the world.”

Mr. Gonzalez, who graduated from Arizona State University with a bachelor’s degree in finance last month, is buying more shares of GameStop and AMC, even though his $220,000 portfolio is off 37 percent from its November [2021] high, he said.

His 34-year-old sister, Ruby Gonzalez, a behavioral health therapist who works at Phoenix Children’s Hospital and is studying to become a nurse, followed her brother’s lead and invested most of her savings in the two companies. “I want to change market manipulation,” she said.

For the full story, see:

Tara Siegel Bernard, Emily Flitter and Anupreeta Das. “How GameStop Turned into a Fight for Good vs. Evil.” The New York Times, SundayBusiness Section (Sunday, January 30, 2022): 1 & 7.

(Note: ellipsis, and bracketed year, added.)

(Note: the online version of the story has the date Jan. 29, 2022, and has the title “Buy GameStop, Fight Injustice. Just Don’t Sell.”)

Robert Nozick’s libertarian masterpiece is:

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, Inc., 1974.