Diatribes of Jay: The Downsides of Openness

[For a brief explanation of how badly both Trump and his opposition are failing at “the art of the deal,” click here. For a deep dive into how Apple tries to thwart Google’s capture of the web-browser market, click here. For a review of Speaker Pelosi’s superb qualifications to lead the Democratic Party, click here. For reasons why natural-gas and electric cars are essential to national security, click here. For additional reasons, click here. For the source of Facebook’s discontents and how to save democracy from it, click here. For Democrats’ core values, click here. The Last Adult is Leaving the White House. Who will Shut Off the Lights? For how our two parties lost their souls, click here. For the dire portent of Putin’s high-fiving the Saudi Crown Prince, click here. For updated advice on how to drive on the Sun’s power alone, or without fossil fuels, click here. For a 2018 Thanksgiving Message, click here. For a list of links to recent posts in reverse chronological order, click here.]

Consider two modern business corporations. We’ll call them Corp A and Corp B.

Corp A has four times as many employees as Corp B. On the average, Corp A’s employees do slightly better than Corp B’s on the intelligence tests that Corp B gives its own employees. On the average, Corp A’s employees tend to study harder and work harder than Corp B’s. The reasons? Corp A’s employees have had it tough for a long, long time and are just beginning to experience something resembling real individual opportunity.

Corp A’s employees live and work in something of a bubble. The information they receive is vetted and carefully controlled by Corp A’s board of directors. The information they generate is carefully evaluated to determine when, how, to whom and whether it should be disclosed. Valuable science and technology that Corp A’s employees develop are rarely given to Corp B or its employees. Corp A’s employees also use a method of communication that is strange and virtually unknown to Corp B’s employees. It’s even hard for Corp B’s employees to understand who governs Corp A and how.

In comparison, Corp B is much more open. It employees have access to any and all information generated by anyone worldwide—except, of course, what Corp A and its followers choose to withhold. Because of this openness, Corp B’s employees spend a lot of time, energy and money considering and evaluating “fake news,” lies and other nonsense. They spend a significant fraction of each day on gossip, insults and slander. So all of their flaws, faults and discontents are open for all the world to see.

So is their best information. In order to induce Corp A’s employees to buy their products and services, Corp B’s leaders freely give Corp B’s trade secrets to Corp A’s subsidiaries, whose workers work longer hours for less pay than Corp B’s. In addition, Corp A has been known to use cyber-espionage to steal Corp B’s secrets. But Corp B hasn’t done much about it, until lately, because Corp B’s leaders were getting rich from their minority stock in Corp A’s subsidiaries.

If you knew nothing more about Corp A and Corp B than the foregoing, which one do you think would win any all-out competition between them? How long, do you think, could Corp B could remain independent before it became a wholly-owned subsidiary of Corp A? Would the time lag be measured in decades, or years?

Then consider further. Every fact stated above about Corp A and Corp B applies to China and the United States, respectively. Just think of their “employees” as their respective peoples, and China’s “board of directors” as the Plenum of its Central Committee—a nice size for a board, now seven members under Xi Jinping, down from nine! Of course Corp A’s unique method communication is the Chinese written language, which avoids all the pitfalls of China’s many spoken dialects, and which perhaps a few percent of Americans (mostly ethnic Chinese or other Asians) can read.

The essence of the comparison is this: China has over four times as many people. On average they are smarter and more diligent. And the flow of information goes mostly one way—from America to China, not vice-versa. Public information in China also focuses on more practical and important stuff, not all the useless gossip, fads, fakes and insults that reverberate endlessly here—let alone our president’s daily moronic Tweets.

If you consider only important information, such as who rules and how, fundamental scientific discoveries, and important breakthroughs in technology, then the “one-way-ness” of the information flow becomes even more striking. With such a disparity in information flow, and more and smarter people, China is likely to become the world’s dominant power within the lifetimes of today’s youth, if not its retirees.

It’s important for Americans to understand that none of this—or very little—has anything to do with conniving or dastardly plots on the part of China or its leaders. Less than a century ago, China was a pariah country ruled by warlords, diced up among Western colonial powers like a piece of smoked ham, and subject to hundreds of thousands of deaths every spring when the Yangtze River flooded.

It was inevitable and desirable that China rise from that abject condition. There is pride and value in its rising, for our entire species.

Even the means by which China rose were inevitable. While refusing to forsake its own history or culture, China learned from the “West.” It picked and chose among the West’s most effective economic systems.

After a three-decade flirtation with Communism, China settled on highly-regulated capitalism—an economic system introduced by our own FDR. For historical reasons, China called this system “Communism.” But in China it was really just a modification of the old imperial system at its best, in which thousands of highly educated and technocratic Mandarins did the actual local ruling. It’s a system a bit like our “federalism,” but with much less emphasis on rights and more on power and control.

Yes, China does steal some secrets and intellectual property. But the West’s dirty little secret is that intellectual property is an idea the West imposed on Asia. It’s not native to China or to Asia generally. Instead, the traditional Chinese and Asian view is that “to steal a book is an elegant offense” because it spreads knowledge.

Western economists did discover that patents and copyrights can confer economic benefits. They can stimulate the investment of risk capital in inventions and writings and thus help speed their development, use and dissemination. But they can also fail, for example, when patent or copyright owners suppress, misuse or simply fail to exploit their intellectual property and the law keeps others from exploiting it.

Anyway, China found a much simpler and more direct way to attract and exploit inventions and writings. It got American capitalists to lead a gold rush to open China’s huge market and exploit its cheap labor. American capitalists willingly sold their intellectual property down the Yangtze River in order to (1) build their corporate empires and (2) get rich personally. China’s diplomatic and business skill in inciting that far-western gold rush has probably been human history’s most striking example of one nation peacefully raising itself on the back of another.

The big dirty secret of Western capitalism is that maybe nine-tenths of the transfer of science and technology to China over the last forty years (since Mao’s death) have been entirely voluntary. Scientists did it because that’s the way Western science works: full disclosure of every success and failure in observation or experiment leads to the next step. Capitalists did it because that’s how they could most quickly get rich and build their corporate empires. China never forced anyone at gunpoint to go there, invest money and technology or open a plant.

Except for the more recent cyber-espionage and occasional human espionage, there was nothing at all dirty or underhanded about this. China just exploited the natural cultural tendencies of foreign leaders and capitalists for its own benefit. You might call it “economic ju-jitsu.” But isn’t ju-jitsu elegant and clever? Don’t we all admire the Japanese for having invented it, especially to compensate for their generally small stature?

Anyhow, the deed is done, or nearly so. As no less a self-appointed economic authority than Britain’s The Economist has noted, the exercise raised nearly a billion people out of extreme poverty, mostly in China, in a single generation. Now China has reached rough parity with the West in science and technology. Its recent robotic visit to the Moon’s far side so attests, as does its competitiveness, if not primacy, in experiments with quantum computing and communication.

These facts of today’s life raise three important questions of responsibility. What part of our failure to guard our own secrets is China’s fault? When our capitalists sell our technology to Chinese companies in order to enrich themselves and expand their corporate empires, what part of that is China’s fault? When our venture capitalists, in order to gain access to Chinese brains and money, push to water down our export controls and restrictions on foreign investment, which are designed to protect our secrets and technology, what part of that is China’s fault?

If the US wishes to maintain, let alone increase, is supposed edge over China in science and technology, it had better start working to make itself a less open and free society. It had better do something about all the capitalists who still haven’t gotten the word, and are busy selling Western know-how for a foothold in China’s huge market. It had better re-educate all the venture capitalists who complain about US government export controls and limits on incoming foreign investment imposed in the name of “national security.”

The West had also better do something about Donald Trump. His trade wars are a moron’s response to the so-called “Thucydides Trap.” Remember that old meme? It’s the notion that history gets dicey and dangerous when a rising power, like China, challenges a dominant but falling power, like the United States. To apply two Chinese characters, those times are like a combination of “danger” and “opportunity,” which spells “crisis” in Chinese.

The dangers are obvious. China and its leaders are too smart to start a nuclear war, but a real conventional war over Taiwan or the South China Sea could be as devastating as World War I. As we approach the one-hundredth anniversary of the “Great War’s” conclusion, our entire species is revisiting (vicariously) just how stupidly disastrous and wasteful that war was.

Even with no bullets flying, a general economic war with China could be just as disastrous and wasteful. Supply chains could break, multinational firms could die, incomes and trade could plummet, and the world could fall into a second Great Depression like the one nearly a century ago, to which tariffs were a significant contributing cause. Ever heard of Smoot and Hawley?

Maybe, just maybe, Trump could “win” a few needed concessions on intellectual property theft and call it a day. But the cat is really out of the bag already. China has learned enough from the West to become a self-sustaining leader in science and technology, albeit perhaps with some struggle and hardship. The scientific method is neither the West’s secret nor its property. So it’s unlikely that the United States could recover—even together with Europe and Japan—a dominant position in science and technology by solitary effort alone. Isolating China economically or technologically is a loser’s game, both for those who play it and for our entire species.

There are, fortunately, other, even more important goals to be addressed. They are: political independence, democracy and human rights.

Why is there suddenly an epidemic of authoritarian governments around the world, in places as different and widespread as Brazil, Egypt, Hungary, the Philippines, Poland, Russia, Saudi Arabia, Syria, Turkey, the United States, and Venezuela? You can’t blame them all on Donald Trump. Nearly all of these nations had authoritarian leaders or precursors to authoritarian rule before Trump ever rode his elevator down into the Inferno of twenty-first-century US politics.

So what caused this worldwide trend toward thugs as leaders? Less than eight years ago, I described and lauded the then-pronounced global trend toward democracy since World War II.

Whatever happened since then? Could it be that observers around the world looked at what has been happening and compared the success of China to the relative (and absolute) failure of the United States? Could it be that many of our species’ leaders and peoples just wanted to emulate the winner? If so, our newish twenty-first century may present the greatest global danger to democracy and human rights since the Enlightenment began four centuries ago. Mankind’s future, a bit late, may be trending toward George Orwell’s dystopian novel 1984.

But what makes a “crisis” is opportunity, as well as danger. China has never been much interested in world conquest, hegemony or domination. It wants to rule the roost and control events in its immediate vicinity, as in Korea, Taiwan, Vietnam and the South China Sea. But that’s nothing new. China has always tried to maintain hegemony in its “near abroad” (to use a Russian term), if only for the sake of stability. (Good luck with “stability” in North Korea!)

Nevertheless, China has never had much interest in ruling the world or nations far from its borders. Among other reasons, it never thought them worthy of conquest because it believed them incapable of attaining its own high level of civilization. So China’s history and self-image is consistent with its coexisting with a world in which human rights, freedom and democracy are far more important without than within its own borders.

Maybe that’s what the West should insist on as it comes to terms with our new Chinese Century. It should negotiate a “solution” in which China is allowed, if it can, to achieve the economic supremacy that its huge population and extraordinary recent success portend, while leaving the rest of the world to live according to its own rules, norms and cultures.

Isn’t this precisely what Xi Jinping meant in 2009, before he became China’s supreme leader, when he emphasized modern China’s non-intervention policy:

“There are a few foreigners, with full bellies, who have nothing better to do than try to point fingers at our country. China does not export revolution, hunger or poverty. Nor does China cause you headaches. Just what else do you want?”

Such a policy, strictly construed, would preclude taking foreigners hostage on flimsy pretexts, as if China were Russia or Saudi Arabia. It would preclude capturing and forcibly “repatriating” foreign citizens and residents who happen to have Chinese ancestry or ties. And it ought to preclude militarizing parts of the South China Sea in contravention of treaties to which China has subscribed.

So maybe we should just try to hold Xi to his non-interventionist word. The world would be a more peaceful, prosperous and safe place if we could do no more or less than that—if we could just push the one-quarter of the human species that China represents to disavow thuggery, at least as practiced on foreigners and outside its own borders.

Fortunately, nothing in China’s past seems to preclude our doing so. The trick for the West will be arriving at an acceptable agreement on Korea, Taiwan and the South China Sea without forsaking this solution. At a minimum, the West (and those parts of Asia that wish to follow it) should do better than Hong Kong in securing their own political and cultural independence for the long haul. Isn’t that a worthy goal which, unlike keeping China down and backward or becoming secretive and authoritarian ourselves, is both morally justifiable and practically attainable?

Footnote 1: Today there are many, many more “Mandarins.” The Chinese Communist Party has some 89.45 million members, more than the entire population of Germany. So it’s not just some tiny elite. It’s an entire class of virtually everyone in China with a serious interest in politics. It’s also a meritocratic, competitive arena in which people at the upper levels know each other intimately from actual working experience. No one like Donald Trump could ever reach the Plenum in China because reasonable people who knew him from close contact, and not from remote sound bites on Fox, would have weeded him out long before that level, just as they did the dangerous demagogue Bo Xilai. Meanwhile, we Yanks have an inexperienced, incompetent man with a narcissistic personality disorder as our supreme leader.

Footnote 2: Virtually every developed nation once stole others’ intellectual property during its developmental stage. We did, too. During the time before we adopted copyright law, we stole both fiction and non-fiction books from England. In the absence of copyright law there was no legal protection for the first publisher in our country. So rival American publishers would literally race each other across the Atlantic to get books bought in England in press on this side. The winner of the sea race, being the first to publish here, usually captured the lion’s share of the American market.

Footnote 3: This apothegm is part of the title of a book by a modern China expert describing the origins and evolution of the traditional Chinese views of intellectual property.

Although China’s uniquely complex and burdensome system of writing may impede abstract thinking and even creativity, China has never lacked for practical inventiveness. In ancient times, before Europe began thinking of patents, China made three of the most consequential inventions in human history: gunpowder, noodles and printing. (Much later, Johannes Gutenberg of Germany invented printing with moveable type, but the Chinese invented the process of printing a page with a block, thereby producing numerous paper exemplars from a single physical device. Gutenberg departed from that point, exploiting the advantages of an alphabetic written language.)

Footnote 4: This point confused our own Thomas Jefferson. In letter to a friend, he observed, “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper [candle] at mine, receives light without darkening me.” For this reason, as well as for his support of the English Statute of Monopolies, which was the ultimate source of our American antitrust law, Jefferson wanted to include a prohibition against monopolies in our Bill of Rights. In a series of letters, James Madison sought to convince him that Italian, German and English experience with patents and copyrights had been salutary. Eventually, Jefferson endorsed the so-called Intellectual Property Clause of the US Constitution, Article I, Section 8, Clause 8, which empowers Congress “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The clause prohibits other monopolies only by negative implication, so anti-trust law did not really catch hold in the US until Congress adopted the Sherman Anti-Trust Act of 1890.

Footnote 5: Now may not be exactly the right time for this push, when our own supreme leader is himself a lawless thug, albeit a toothless one outside our borders. But Trump will not be in the White House forever. Our diplomatic corps could begin to propose this sort of solution even now, in secret, knowing that the Chinese, better than most, enjoy the virtue of patience.

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Diatribes of Jay

16 January 2019

The Downsides of Openness

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