Category Archives: Signposts to the Future

It’s a Stumper – Or Not

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If a ship had 26 sheep and 10 goats onboard, how old is the ship’s captain?

This question made the rounds on the Internet recently. It went viral in the US, where netizens, one after another, marveled at the fact that such a difficult question had been given to 5th grade students in China. Is this some kind of new Chinese math?

It took me a minute, but having spent nine years living and working in China I got the answer fairly quickly. My Chinese wife got it immediately. (As I knew she would.)

The answer? There isn’t one. Or, more accurately, there are many. There is no single answer.

And, no, this isn’t a joke. My wife didn’t even smile. She just answered the question and left the room, after reading the original Chinese and verifying for me that the translation was accurate.

This question is the perfect explanation for why the future of technology is likely to belong to the Chinese and not Silicon Valley. Or maybe not.

The reason this school gave this question to fifth-graders is that there is concern among Chinese educators that Chinese culture fails to instill students with enough curiosity. And curiosity, they believe, is critical to achievement in a technologically advanced world. When I ran a glass factory in China I had the same concern. They’re right, but they’re wrong.

Chinese culture is built on a very inductive worldview. Inductive logic moves from right to left, from observation to speculation. That is why Confucius said, “Wherever you go, there you are,” and that makes all the sense in the world to the average Chinese fifth grader. (Ask your American fifth grader what Confucius meant.)

American culture, in contrast, is built on a deductive worldview. Deductive logic is the logic behind the scientific method and moves from left to right. For every cause there is an effect, and according to the laws of science it is the same every time. (In truth, it is not. Science is really about probabilities, not absolute truths.)

To put it in terms of the modern world, the machines in the glass plant I managed in China cost millions of dollars to build and were immensely complex. And when they broke down the Chinese mechanics at this plant could fix them in a fraction of the time that it took the mechanics at other plants around the world, including those in the US, to fix the exact same machine.

If you were to ask the Chinese mechanics what happened, however, they would surely respond: “The machine broke down.” And that drove our Western mechanics crazy. “Don’t they understand how important it is to understand why the machine broke down so that we can prevent it from happening again?” they would demand of me. The implication, of course, was, “What are you teaching them?” (BTW, this is where prejudice comes from, but that’s another topic.)

But the Chinese mechanics were, in fact, teaching me. “They don’t care why it broke down because while they were working to get it running again a different machine broke down and they felt it was a better use of their time to go fix the second machine than to waste a lot of time trying to answer a question that may have no answer or which more than likely has an answer the knowledge of which will do nothing to prevent it from happening in the future.”

American companies are infatuated with process because of their deductive worldview. And process can be a very good thing. It can also lead to excessive bureaucracy, a lot of extra costs, and terrible customer service. Process isn’t bad per so, but it can be.

So, too, can a lack of curiosity. Which is exactly what the Chinese educators were getting at with their question. They just wanted their fifth-graders to think about it. Instead of immediately assuming there is no answer, as older Chinese like my wife would be inclined to do, they wanted the students to wonder if there, in fact, might be a knowable answer.

So which way is better? Neither, of course. As in all things in life and the universe the truth is not binary. Real knowledge lies in the balance between the two extremes. In Silicon Valley they refer to these digital options as 0 and 1 (on and off). In China they refer to the same duality as yin and yang.

If you saw this question on the Internet you probably saw it referred to as a math problem. But it’s not. In fact, the Chinese character for math appears nowhere on the original document provided to the fifth graders. It is only we Americans who feel obligated to define it as a certain type of problem. And suggesting it is a math problem, of course, further reinforces the false assumption that there must be a solution.

To date, Silicon Valley has won the technology race, in large part, because a bunch of college dropouts were incredibly curious. And they quickly figured out that the 0’s and 1’s at the heart of the new technology is all about patterns. That’s what computer coding is, and Americans (and more than a few Chinese) proved very good at working with such binary patterns.

No one, however, will ever be better at working with patterns than the machines built from them. They are, after all, bigger and faster when it comes to patterns. It’s not in their DNA; it is their DNA. And, of course, as a result it is virtually inevitable that smart machines will soon program themselves. (They already are.) Being a computer coder will be about as valuable as being an expert blacksmith.

The economic race will then become not a coding challenge, but a race to tell them what to do, and, very importantly, to make sure they don’t do evil things; because, of course, neither a 0 nor a 1 knows what good and evil are.

Of course, curiosity will be a very valuable thing indeed in this digital world. What can I do with this technology? What is that machine basing its answers on? Does this make sense? Or is this machine acquiring a racist perspective?

Curiosity, however, will only have value until it doesn’t. And the inevitable truth is that sometimes it will and sometimes it won’t. To even understand the problem and the opportunity, in other words, people will have to think holistically. They can’t think in the simple terms of left to right or right to left.

Right now the Chinese have the edge in training their students for that day. Chinese educators fully recognize that the student of the future needs to be both inductive and deductive. They must think bi-directionally.

Some American educators, I have to believe, understand the same thing. Their challenge is the same one, although it comes at the problem from the opposite direction.

The problem is that most American business, and virtually all American politicians, don’t recognize that a problem even exists. To them it’s all about their very simple and one-dimensional perspective on truth.

Think about it.

And while you’re thinking about it, consider reading my latest book: We, Ourselves, and Us: Creating a More Just and Prosperous America. It’s now available on Amazon.

It’s a book about the age of the captain on a ship holding 26 sheep and 10 goats. Or is it 26 goats and 10 sheep? Or two captains, perhaps, one of whom happen to be ______.

I guarantee my book will be worth your time. And if you agree, I would greatly appreciate it if you take the time to post a review on Amazon, Goodreads, or whatever book site you enjoy. (It’s a binary world, after all. Authors, like everyone else, live by their clicks—whether they’re sheep or goats.)

click here to go to Amazon now

We’re Not in Kansas Anymore

photo credit: iStock.com/skodonnell


Author Gary Moreau, aka Avam Hale in fiction

Exactly one year ago, President Xi Jinping delivered a speech to the United Nations office in Geneva, entitled, Work Together to Build a Community with a Shared Future for Mankind. It was collective in its vision: “China is ready to work with all the other UN member states as well as international organizations and agencies to advance the great cause of building a community with a shared future for mankind.” And it was long term in its perspective: “Building a community with a shared future is an exciting goal, and it requires efforts from generation after generation.” The sentiment would later be enshrined in a formal resolution at the 55th UN Commission for Social Development, as “a human community with shared destiny”

Jump ahead one year to January 26, 2018, and United States President Donald Trump spoke to the World Economic Forum in Davos, Switzerland, at its annual conference of the heaviest of the heavy hitters in global politics and business. The man elected on the simple platform of “Make America Great Again” (MAGA), like Xi Jinping before him, delivered his vision for the future of the world.

Trump opened with the warning that “I’m here to represent the interests of the American people…” And, as expected, most of the speech was devoted to his personal contribution to “helping every American find their path to the American dream.” Specifically he spoke to the surging stock market, job creation, small business confidence, deregulation, and, of course, “…the most significant tax cuts and reform in American history.” (Which, on a side note, is not true.) As you would expect from the MAGA president, it was all about America, and, not surprisingly, him. After all, MAGA has everything to do with individuals, he being the biggest and most powerful “I” among them, and almost nothing to do with “human community,” as President Xi described it.

Trump’s would have been the perfect speech had it been delivered by President Dwight D. Eisenhower, a fellow Republican, in the 1950s. It would have been even more appropriate, in fact, given Eisenhower’s military fame, and the fact that the only references Trump made to the US’ role in the world had to do with our self-appointed role as the world’s policeman, and “making historic investments in the American military”, already the world’s largest, costing $1,900 per year for every man, woman, and child in America, at a time when 80 million Americans have little or no health insurance.

Other accomplishments noted by Trump were “eliminating 22 burdensome regulations for every new one,” “…no longer turning a blind eye to unfair economic practices overseas,” and “lifting self-imposed restrictions on energy production,” even though all restrictions are self-imposed and according to the laws of the universe energy is not produced, but merely transformed (and thus fixed in quantity). And, of course, insuring that all nations “contribute their fair share” to the cost of the American agenda.

All told, Trump’s individualist agenda was summed up by this simple claim: “When the United States grows, so does the world.” Perhaps unconsciously, it was the exact same sentiment that Charles Wilson (1890-1961), the CEO of General Motors, made during his confirmation hearings as Secretary of Defense under Eisenhower. When asked about a potential conflict of interest between the interests of the US and GM, he is rumored to have said, “What is good for GM is good for the country.”

The world of today, however, is not the world of the 1950s. The world’s population has expanded three fold, from 2.5 billion people at the end of World War II to 7.5 billion people today, even thought the world’s land mass and its inherent ability to sustain life have not changed at all. As a result, the earth’s climate is changing, in less than desirable ways, and clean air and clean water are among the world’s most precious resources, and disappearing fast.

Technology has made the world smaller and virtually eliminated the concept of local communication and debate. Information flows to a far wider audience but is transmitted by global super-monopolies like Facebook and Google, who rule the world by algorithms that are developed with their own inevitable bias but remain virtually unregulated.

In short, this is not the 1950s. And any desire to turn back the world clock in search of that era is sure to fail. People and technology cannot simply be put back in the bottle. That would require the type of totalitarian dystopia that Orwell wrote about and the Great Generation had just sacrificed countless lives to vanquish.


The author’s new book will be released on February 15, 2018. Reserve your copy now.

The U.S. Constitution, one of the most famous documents in global political history, begins with the words, “We the people.” Yet it is “Me the individual,” that Donald Trump embodies and best represents the America of 2018. My identity, my rights, my tax cut, my income, my freedom—whether it’s my freedom to own assault weapons or my freedom to marry who I like—are at the heart of both the conservative and liberal political agendas.

The conservatives want to pull the rest of us along through individual exceptionalism. The progressives want to push us along through the acceptance and inclusion of all micro-group identity. Neither, however, will work, because both are built on the notion of an individualized world that simply doesn’t exist any more. Both would have been legitimate competing worldviews in the 1950s. Both are obsolete today.

Whether we want it or not, we will face the “shared future” that President Xi Jinping referenced more than one year ago. We will not have the option to choose who will be a part of that community. We all will. Whether you are a Dreamer, a Tea Party supporter, a member of the Rainbow Coalition, a misogynist or a feminist, a white supremacist or a believer that Black Lives Matter, will not matter in the end. We will be forced to live as a single, global community, consuming resources that are fixed by the laws of the universe.

We really only have two choices: 1. We can kill each other. (Or die trying.) 2. We can turn “Me” into “We.”

We have, of course, been here before. Eisenhower and the Great Generation faced the very same dilemma. And, unfortunately, following the great tragedy of World War I and the even greater human tragedy that followed, as the victors sought revenge on the losers, the “we” side of the option ultimately morphed into brutal forms of fascism and communism. They, in turn, gave us the Nazis, the Holocaust, the gulags of the Soviet Union, and the killing fields of the Khmer Rouge.

As a result, many of today’s most ardent individualists believe that any form of collectivism is, as the 20th Century seemed to show, inherently flawed and will only lead to brutal totalitarianism. That, however, is simply not true.

More importantly, however, it doesn’t matter if it is or not. Whatever form of individualism we pursue, the elite, however that is defined, will be forced to squash the many in the fight for limited resources. One percent of the world’s population already controls more than half of the world’s wealth. What will happen when it controls 90%? (And it will, if nothing changes.)

What will happen, in contrast, if the coalition of oppressed micro-identities overthrows the oppressors? All will be well, of course, if the former oppressors all accept a new micro-identity. But what if they don’t? And what about human psychology suggests that they will?

We may not agree with Presdient Xi Jinping’s politics. We can’t, however, plausibly deny his vision of a shared future. An economically and militarily elite America will not and can not pull the world along. A progressively elite America, even if elected, and even if it is truly inclusive, cannot push the world along.

We’re not in Kansas anymore. And the sooner we realize that the less pain we will be forced to endure.

Note: Author Gary Moreau was recognized by the World Economic Forum as a Global Leader for Tomorrow in its inaugural class of 1993.

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

Follow on Twitter @gmoreaubooks

Summary for We, Ourselves, and Us:

In this new guide to American politics and economics, Gary Moreau wants to turn the “I” into “We.” As he argues in We, Ourselves, and Us, Americans’ cultural sense of individualism is hindering rather than helping the country. Moreau instead argues for a change to political, economic, and social systems to refocus them on the collective good. As he proposes this important change, Moreau argues that

  • both major political parties are offering ineffective solutions to the problem,
  • the model America was based on is no longer realistic for a modern society,
  • both communism and socialism fail because they are still based on the idea of individuality,
  • the unequal flow of power is responsible for a prejudiced and unbalanced society,
  • the concepts of obligation and self-interest are intrinsically connected,
  • individual advancement means nothing without collective advancement, and
  • all of society is interconnected in nuanced and important ways.

Moreau does not equate collectivism with communism or other political movements. He isn’t arguing for the elimination of private property or other drastic changes. Instead, he simply gives you a new way of viewing systems of power and important suggestions that could lead to satisfactory results for the entire nation.

 

CES Update: Google Expands in China

photo credit: iStock.com/tomch


Author Gary Moreau, aka Avam Hale in fiction

On January 11, 2018, I posted “Consumer Electronics Show”, in which I gave some dimension to China’s importance to American tech and offered my assessment that China, for the reasons stated in the post, would be a major player in the future global tech industry. And, yes, this prognosis was very different from the one I provided in 2015, when I wrote Understanding China: There is Reason for the Difference. And, of course, I provided the reason for the change of heart.

Five days after I released that post, Google announced it was opening an office in Shenzhen, China, the center of the hardware manufacturing universe, just across the river from Hong Kong. And a few days after that Google announced a broad patent sharing agreement with Chinese tech giant Tencent, the $500 billion parent of China’s top social media and payment app, WeChat.

This, of course, all comes on the heels of Google’s previous announcement of a new AI research center in Beijing, where the software side of China’s tech business is growing rapidly, in part due to the presence of many of China’s top universities there. And, of course, the symbolism of Google’s CEO Sundar Pichai speaking at a conference in China, back in December, hosted by the Cyberspace Administration of China, which overseas Internet censorship in China, where Google’s search engine, as I write this, remains blocked.

In addition to providing some support for my prognosis, these announcements have triggered some additional thoughts that only reinforce my conviction in that previous prediction.

It is difficult for Westerners, and Americans in particular, to appreciate the role of the Chinese government in the economy. If your company does not maintain good relations with the government, you simply won’t succeed there. And it’s not enough to simply do what they ask you to do. If you want to succeed, you must be pro-active, and you must convince the government that you are a good partner. That means you have empathy for the job it faces and you share its goals for model corporate citizenship.

As my faithful readers know by now, I believe the universe is ultimately defined by dualities. For every pro there is a con, for every cloud there is a silver lining, for every yin there is a yang. Reality, as a result, is not so much defined by the dimensions of the two sides of that duality as it is by the degree to which equilibrium is established between them.

American business people look at the role of the government in the Chinese economy and immediately think oppressive regulation, bureaucracy, long delays, and, of course, bribery. And, of course, all of these things can exist. That is not to say, however, that they must exist, and, in fact, my nine-year experience there convinced me that while these concerns are realistic, they do not define the current reality. I found the government facilitated my business more than it hindered it and not once did my company pay a bribe, nor was one ever solicited.

And, yes, I am experienced enough to know that a government official looking for a little grease is not going to ask me, a foreigner, directly. If an official is corrupt it doesn’t mean he or she is stupid. Which is why every quarter I personally reviewed each and every cash disbursement made by my company, from the payment of invoices to the reimbursement of travel expenses, to the replenishment of the petty cash fund. If you are looking for fraud, that’s where you will find it. And I found none.

In the case of Google and the tech industry you have to look at the positive side of the government duality issue. In the fast moving tech industry, a government alliance is not a strategy for risk avoidance; it’s a strategy for gaining competitive advantage in the global tech industry.

That is because, unlike the US, China, like many developed countries, including Germany, has a very well defined national industrial strategy. The policy defines those industries where it sees the most positive growth potential, in fitting with the country’s social and political agendas, of course, which serves as a blueprint for both corporate leaders and government regulators. It’s totally transparent and insures that everyone is singing from the same song sheet.

The US, by contrast, leaves its national industrial policy up to the “free markets.” The US, in other words, lets the corporations decide, based on the theory that they will be guided by Adam Smith’s invisible hand of profits to do what, in the end, is in the best interest of the country and its citizens.

Like a lot of our political and economic theory today, unfortunately, that’s not the way things really work. The US has an industrial policy; it’s just not transparent. It is defined by politicans, corporate lobbyists, and special interests behind closed doors. This is one of the main reasons that the rich continue to get richer in the US. They are the only ones with access to real political power because they are the ones with the money that politicians need to remain in power. We don’t call it bribery, so that we can claim the moral high ground, but it is bribery of the worst kind—both distortive and clandestine. (I was a CEO and board member in the US as well as China, so this is not conjecture.)

Google has apparently seen the light. (Microsoft saw the light years ago but it learned some very hard lessons before it did.) They recognize that China is the world’s second largest economy, with 1.4 billion citizens who are the earliest of early-adopters, and which, if you have good government relations, is going to be the fastest moving playing field on the planet. As I noted last time this is because, if you make the national priority list, which tech sits atop of, your regulatory and legal problems will largely disappear. The government will clear the runway in the way that only a government can. In the meantime, the young bucks of Silicon Valley will be trudging through the quagmire of preventing “fake news” and fighting it out in court over who owns what intellectual property rights.

When it comes to China, Americans have been trained to see the glass, particularly when the government is involved, as half full. In reality, the opposite is true. A partnership with the Chinese government will not only set up your company to succeed in China, it will set you up to dominate the global market for tech or any other favored industry.

The world has changed. It is smaller and more crowded. But more importantly, technology has been a game-changer. And one of the things it has changed most dramatically is the integration and complexity of the political, economic, and social systems we use to govern the country. We can no longer think of them in discrete, independent terms.

Environmental scientists used to think of our environment as a collection of discrete ecosystems. We had a prairie here, a polar ice cap there, and a rain forest a long way away. They now recognize, however, that these are not discrete. They are all part of a single global ecosystem that is intricately interconnected. Yes, climate change can lead to huge snowstorms and record-breaking cold temperatures along the US eastern coastline. That doesn’t mean the climate isn’t changing. It just means that the global environment is more inter-connected than we ever imagined.

Other areas of science have discovered the same thing. The various branches of hard and soft science (e.g., biology and economics) were once studied and researched as discrete subjects. Today, however, the real science is being done in areas like evolutionary biology and behavioral economics. The knowledge of how the world works is found not within the functionally discrete pockets of science, but in the overlaps that pull them all together into one inter-connected reality.

I’ve actually written a book about it. It’s called We, Ourselves, and Us: Creating a More Just and Prosperous American and it will soon be available on Amazon in print and Kindle versions. It is not a book about China. It is a book about how to leverage our individual liberties and opportunities into a new model of political economy that emphasizes our collective advancement as a country and a just, inclusive society.

Here’s the text from the back cover:

The phrase “We the people” is the start of one of the most famous documents in American history, yet few have paused to consider what it truly means. In his new political guide, Gary Moreau ponders this expression and the change it could represent for our society. America has long perpetuated an idea of rugged individuality and exceptionalism. The “we” in society has been replaced with “me.”

Moreau explains why this notion is simply untenable for America. America has gone through some growing pains in the past two hundred years, and Moreau believes that society’s refusal to cast off some of its original, ineffective methods is a pressing issue. Instead, they should be replaced with a model focused on providing for the collective good.

The world is changing, and for America to continue to be the land of happiness and prosperity, it needs to change with it.

The release date is February 15, 2018, but that is subject to change as the design process wraps up. In the meantime I am offering 25 free copies of the book in either paperback or Kindle formats. Just send your name and address to gary@gmoreau.com with the subject line “Free Book” and I’ll send it out as soon as it is available. First come, first served. For print versions, US addresses only, please, and for the Kindle version you must have a US e-mail address and access to Amazon US. (I don’t need your physical address if you are requesting a free Kindle copy, and I promise not to sell any of your contact info or use it for any other purpose.)

 

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

Follow on Twitter @gmoreaubooks

The Case for Collectivism


Author Gary Moreau, aka Avam Hale in fiction

In a recent survey reported by USA Today, one out of two American millennials preferred communism to capitalism, and 22% said they have a favorable impression of Karl Marx. For almost any American older than a millennial, this came as a complete shock, and, with few exceptions, has been characterized as a failure of the American education system to accurately portray history.

But is that a fair assessment?

I have a degree in Economics from Middlebury College, where I graduated with honors. I have spent an entire career in Corporate America, more than half of that in executive management. And I lived and worked for nine years in China, a collectivist state, where I managed a factory and a company, referred to as a Wholly-Owned Foreign Enterprise (WOFE), for a public American corporation. I believe, as a result, that I bring some experience and credibility to the topic.

Let’s start the assessment by dropping the labels. All of the relevant terms—democracy, capitalism, communism, socialism, and fascism—raise a lot of dust but have lost all of their original meaning. China is not a communist state. It is a collectivist state run by the Communist Party of China. The Chinese themselves refer to it as “socialism with Chinese characteristics.” I will refer to it simply as Chinese collectivism.

The United States, on the other hand, is not a pluralist democracy. The Founding Fathers went to great lengths to avoid the potential tyranny of the democratic majority. The three separate but equal branches of government (legislative, administrative, and judicial), the Electoral College, the unique structure of the US Senate, with two senators from each state regardless of population or economic strength, and the very specific and largely irreversible allocation of certain powers to state and local governments, all are designed to limit the power of the plurality.

Both China and the US allow free market forces to “manage” large parts of the economy. There are, however, two big differences. The first is that almost all property in the US, including intellectual property, is privately owned. In China, on the other hand, the government retains ownership of much of the common property, including all land and the natural resources it holds.

The Chinese collective also retains ownership and control of key strategic industries that have a broad social impact, including most of the banks and much of the energy sector. The Chinese government, moreover, maintains a well-defined national industrial and economic plan that guides public and private investment, in part through taxes, and provides strategic direction to the regulatory branches of government.

There are no government owned companies in the US, although the US Post Office and NASA are independent agencies of the US government. The General Services Administration (GSA), moreover, another independent agency of the federal government, oversees the expenditure of approximately $66 billion in government spending each year and manages about $500 billion of US property.

In total, government spending by the Chinese and US governments is about the same, at roughly $2.8 trillion per year; although the US economy is larger in total.

The US, however, has no national industrial policy, despite the amount of money spent by the government each year. While China targets key industries for development and protection in the interest of national security and social and economic development, the US, in theory, leaves such decisions up to the private sector.

That’s only in theory, however. In practice the US has a well-defined national industrial and economic policy. There has to be given the amount of money the government spends each year and the regulatory influence the government has over the economy. The real difference is that in the US government policy is left largely up to private individuals and corporations to define. Corporate lobbyists and corporate government relations staffers play an active role in actually writing government legislation and regulation, always, of course, in an attempt to promote the self-interests of their employers.

One of the primary vehicles for economic policy in the US is the US Tax Code. The Code itself, along with the supporting documentation and legal interpretation, runs to 70,000 pages in total, most of which is devoted to defining tax breaks and other financial considerations designed to favor one sector of the economy, or one segment of any given sector, over another. The 2017 Tax Reform recently approved by the US Senate itself required more than 400 pages to articulate what was supposed to be a simple reduction in tax rates. It wasn’t, of course.

That is why despite a top corporate tax rate of 35%, most large corporations pay considerably less. Google, in its last reported year, paid only 19%. Apple, one of the most profitable companies on the planet, and which holds $230 billion in cash in overseas accounts, paid only 25%. Asset rich ExxonMobil and GE both enjoyed tax credits, effectively sheltering all of their income from taxation, all based on provisions buried somewhere in those 70,000 pages.

Another way in which national policy is established in through government regulation and, once again, much of that has been turned over to the private sector, allowing business people and corporations to use regulation to benefit themselves and tilt the playing field in their favor. Many of these regulations are fraudulently sold to the public in the name of consumer protection, but the protection of certain businesses and their profits is the real objective.

In the state of California, for example, you cannot cut hair for a living unless you receive 5,000 hours of training at a state-accredited for-profit barber school. It’s doubtful that enough Californians complained about bad haircuts to push the state legislature into action. It’s far more likely, and almost certain, that the barber schools, in partnership with the existing barbers looking to sustain higher prices, lobbied for the legislation and were readily obliged.

In my own state of Michigan Tesla cannot sell its cars directly to consumers utilizing the business model it has built its business on. And the reason is not Ford, GM, or Chrysler. The reason is the independent automobile dealers association that has used its political muscle in Lansing to push for such protection. Michigan is not alone. Independent dealers in many states have successfully lobbied their state legislators for protective legislation that goes well beyond any legitimate consumer interest.

The list is endless. It was recently announced that a common medication for erectile dysfunction may soon be available over the counter in the UK, thus reducing its price and freeing up doctors to spend their time on more pressing health matters and thus reducing health care costs. In China, many common medicines, except narcotics, are available directly from pharmacists without a doctor’s prescription.

The US, on the other hand, has one of the most restrictive set of pharmaceutical regulations on the planet. It’s one of the reasons the US spends more on healthcare than any other nation despite the lack of universal insurance coverage. It’s all justified on the basis of consumer protection, of course, but it coincidentally maximizes the profit of the big pharmaceutical companies and, by the way, we have a huge opioid epidemic anyway. (Why don’t we treat prescription drugs like guns? Opioids don’t cause addiction. The people who abuse them do.)

In the end, as I’ve noted, the biggest difference between Chinese collectivism and what I will call Americanism is in who defines government policy and who owns the country’s collective assets.

No individual or corporation owns land in China. It’s owned collectively by all of the people of China and managed on their behalf by the Communist Party. As a practical matter, the distinction doesn’t have much impact on daily life. The feel is the same. Both my home in China and the factory I managed sat on land owned by the people of China but managing either one felt pretty much the same as it does here. As they say, possession is nine-tenths of the law.

If the day to day difference between collective ownership and private ownership of property is immaterial, it has a huge impact on who decides how to use that property. In the US, that right resides with the individual and the private corporation. In a collectivist state, that right resides with society at large.

Over time, of course, the US has discovered the inherent weakness in private ownership of property and has sought to restrict usage through zoning laws. The local zoning board, however, is entirely local and fairly easily swayed in favor of development by their aligned interests and political pressure, so the practical effect has been very limited. Wealthy developers still have the power to do what they want in the pursuit of profit.

What we can’t do as a country, however, is build new airports, new train systems, or more efficient highways. And that’s because the rights of the individual, the cornerstone of Americanism, are protected by a strong judicial system. Large infrastructure projects can be tied up in the courts for years, if not decades, effectively prohibiting the kind of large infrastructure projects that the Chinese excel at. (Many experts believe that this deficiency alone, will ultimately compromise America’s global leadership.)

America can’t, in other words, adapt to technological innovation. We didn’t have airplanes, automobiles, or high-speed trains, all of which require land-intensive infrastructure, at the time of the nation’s birth when the principle of private ownership of land was established. We had canals and roads and harbors, but these were easily accommodated through the legal concept of eminent domain. Even that collective protection, however, has been severely eroded by the courts and the politicians, both of which are easily exploited by wealthy developers and other corporate interests.

In theory, of course, the American government is accountable to the people. That theory, however, has been severely tested by the passage of time and the steep cost of running a successful modern political campaign. Money, not ideology, now controls the American political process. If there is anything to be learned by the recent rash of political resignations and decisions not to seek re-election it is that political power does not accrue to the men and women of the highest integrity and civic mindedness. It accrues to those who can harness the most money and power.

So, in the US, in theory, we have a paragon of free market capitalism and democratic freedoms. And in China we have the last remaining socialist superpower, where the press is censored, there are no free elections except at the local level, the government retains ownership of key industries and the country’s largest companies, and there is no private ownership of land.

In practice, however, the US, by its own admission, suffers from ongoing sexism, racism, and religious prejudice. Mass murder is almost a daily event. Drug addiction is rampant, wages are stagnant and have been for decades, inequity in wealth and income is expanding, and social unrest and general disillusionment is now the standard.

China, on the other hand, in practice, has raised 300 million people out of poverty in one generation, violent crime and mass murders are rare, the best schools are equally accessible to everyone, virtually everyone is employed, wages have been rising at rates far above the GDP, and the President’s approval rating is among the highest in the world, many times that of our own American president.

Why the disconnect? In a word, context.

Personal freedom and economic well-being do not exist in a vacuum. They exist in the context of a complex web of political, social, technological, and economic conditions that, in the case of the US, have changed dramatically since the country’s founding.

Consider this small sampling of facts:

  • There were 2.5 million people living in the US in 1776. There are 315 million people here today.
  • The entire landmass of the original thirteen colonies was 339,000 sq miles. The US today covers 3,678,000 sq. miles.
  • The only guns available when the Second Amendment was ratified in 1791 were the single fire musket and the flintlock pistol. In the hands of the most skilled operators they had a capacity of about three rounds per minute and were accurate only at very short distances. The Las Vegas shooter, who killed 58 and left 546 injured, by comparison, was able to fire 1,100 rounds in under ten minutes, massacring innocent civilians at a range of almost 500 yards.
  • The first train locomotive to run on US rails did not go into operation until 1829. The first American car was not built until 1893. The first commercial flight did not take place until 1914.
  • The pharmaceutical industry, as we know it today, did not come into existence until the mid-20th Century.
  • The Internet has been in widespread existence for less than thirty years.
  • The 16th Amendment, legalizing the income tax and creating a powerful tool for social and economic engineering, was not ratified until 1913. The tax system we know today did not come into existence until 1954.

In short, our world, and the context in which our political and economic systems operate, has changed dramatically. Yet we still attempt to manage it all with political and economic systems that are built on the ideological premise of the supremacy of the individual over the collective.

Advances in technology drove much of this change. Technology has entirely transformed how we work, how we live, how we travel, and how we communicate.

At the time of our founding, our news was limited to the local newspaper and the men and women motivated enough to grab a soapbox and stand on a street corner. Politics was a part-time profession carried on by people moved by a sense of civic duty. The world of the average American, in short, was a decidedly local world and he or she lived and worked with relative autonomy.

Technology, both directly and indirectly, has made the world both bigger and smaller, connecting us all in real-time. It has also, however, driven the commercialization of every aspect of our lives. It is no longer possible to live a dignified life of poverty, even if you so choose. There is virtually no alternative to money. Even the original social safety net—nature—has been taken away. Living as a self-sufficient farmer or hunter-gatherer in the wilderness is no longer an option. The socio-economic complex in which we live forces everyone into the economic game. Compete or perish, with perhaps a short and undignified stay in government entitlement along the way.

As America grew and prospered, however, an unintended consequence began to emerge. Most of the wealth creation went to a relatively small segment of the population. As time went by, moreover, the system was incapable of correcting itself. The rich, now called the 1%, continue to get richer while the other 99% struggles to get by. Many, in fact, have failed in their quest and are either homeless, addicted, or both. And, most importantly, their hope is lost.

There are more than 540 billionaires in the US today, who share a collective net worth of $2.4 trillion, more than the total GDP of India, a country of 1.3 billion people. Half of Americans, however, make less than $30,000 per year and have virtually no personal savings and sizable amounts of debt. (Student debt is a national crisis.)

Another unintended consequence of this massive wealth creation and its concentration is the creation of a permanent political class. An economy this big and a society this large require full time management.

The two developments—the enrichment of the economy and the creation of a professional political class—were fundamentally inter-related. Modern politics takes a lot of money and the Founding Fathers made no provision to provide it. The need for private funding, in turn, further embedded private citizens of wealth into the political process. And when, in 1886, the U.S. Supreme Court applied the 14th Amendment to give corporations the same legal rights, other than voting, of the individual citizen, the modern era of politics was born.

And it’s not working. And it’s not working because the context has changed. We live in a very different world than we did in 1776 and yet we are attempting to manage it with the same individual-centric political and economic systems developed more than two centuries ago.

The People’s Republic of China, on the other hand, has been in existence for a little over 60 years. And while the Communist Party of China is still in charge, the economic and social management systems have been entirely transformed. Chairman Mao himself would surely not recognize the modern China.

By adapting to change, however, China has emerged as a global superpower and many are predicting that the American Century will soon give way to the Chinese Century.


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Many in America, of course, will argue that China transformed itself by following the example of the US and adopting many of the provisions of free market capitalism. It is these same people, moreover, who believe that the path forward should be to double down on what has worked in the past. We don’t need to adapt, in other words, so much as we need to go back to the perceived purity of the political and economic systems we employed two centuries ago.

It is pure folly, of course. Even if we could turn back the clock, which we can’t, those systems and ideals would no longer work. The result, in fact, would be disastrous; on a par with asking corporations to live without computers or teenagers to live without smart phones.

Technology has so empowered the individual that no single individual can be given the kind of power historically granted to the individual American. It is simply unworkable. What worked when we were few and largely isolated and spent our days farming and hunting, will simply not work today. It would be like giving every colonial soldier a nuclear bomb and telling them to go win the war. They would ultimately win the war, but like the 1%, would dramatically transform the country itself.

In the end, the millennials are right. They may have the details wrong. (The referenced study’s sponsor noted that most of the millennials who voted for communism were unable to define it correctly.) They are, however, right in their instinctive belief that in the modern world in which we live and work, the collective society, not the individual, must reign supreme.

Let’s not call it communism, or fascism, or any of the traditional –isms, because their critics are right; they didn’t work either. And libertarianism, the system of choice for both the alt-right and Silicon Valley, won’t work any better. That would be just doubling down on what we already have and would simply accelerate our decline.

And I am not suggesting we simply imitate the Chinese or try Marxism yet again. The former, for a lot of social and cultural reasons I don’t have space for here, won’t work in America. And Marxism, while ideologically attractive at some level, simply isn’t tenable.

What we need instead is a new form of collective governance that puts the interests of the collective society above the liberties of the individual and manages our collective interests and assets in a way that allows some level of individualism without allowing it to suppress or circumvent the collective good.

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You may contact the author at gary@gmoreau.com
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Here’s what legendary Kirkus Reviews has to say about the author’s new book: “More than a guidebook for managers, this is a manifesto for an intellectually deeper – and happier – world of business.” Kirkus Reviews (starred review)
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Science & Philosophy: The Door to the Chinese Century


Author Gary Moreau, aka Avam Hale in fiction

While it may not be apparent at the level of one-to-one interaction, the Chinese are generally more philosophical in their worldview while Americans and Europeans are more inclined to a scientific interpretation of reality. That is not to say, of course, that the Chinese are in any way compromised in science or technology. They aren’t. Their philosophical bent, in fact, will liberate them to become, I believe, among the best scientists on the planet in the years ahead.

The difference flows from the distinct logic on which each worldview is built. I cover this in depth in Understanding China: There is Reason for the Difference and have referenced the distinction, perhaps to excess, in prior blog posts. I won’t tempt your patience, therefore, again here.

In many ways, philosophy and science are the yin and yang of thought. Science is an empirical methodology for distilling abstract observation down to specific, discreet bits of knowledge, presumed to be nuggets of truth. Philosophy, on the other hand, is the process of amalgamating discreet observations and measurements into broad abstractions of truth that are both all-inclusive and infallible.

Technology, of course, has greatly enhanced the speed and diversity of our ability to measure and record data, and search for patterns therein. This has, in turn, lead to an acceleration in scientific discovery that is rapidly obscuring all other perspectives; most notably the religious and the intuitive.

Philosophy, on the other hand, is constrained by language, on which it is reliant both for the fuel of thought and the ability to debate and share the results. Language, being a human convention created to facilitate the efficiency and effectiveness of communication, is entirely arbitrary and not up to the task of the larger philosophical questions that continue to face humankind. As a result, philosophy seems to be stuck in a time warp. Philosophers are debating the same questions their Greek counterparts did millennia ago, with some apparent progress, but little in the way of resolution.

Philosophy and science, however, much like yin and yang, cannot exist, at least not productively, in isolation. Each is reliant on the other. Because they approach abstraction and reality from the opposite directions, each provides balance to the other. Without one or the other, imbalance results, and thought, or, more specifically, the veracity of thought, suffers.

Many in science believe that philosophy is an antiquated and anachronistic mode of analysis that should be left by the roadside of progress. Just the opposite, however, is true. Science without philosophy is disaster in the making.

We know that many scientific discoveries ultimately prove to be wrong. Einstein was wrong about the static universe. Doctors were wrong for decades about the cause of peptic ulcers. And scientists, who initially thought that matter was made up of atoms, later discovered leptons and quarks, and now believe that 85% of the universe may be made up of dark matter, although it has never actually been seen or measured by anyone.

Marcis Angell, former editor of the New England Journal of Medicine, has this to say: “It is simply no longer possible to believe much of the clinical research that is published.” Stanford researcher, John Ioannidis agrees. He has published a paper entitled, “Why Most Published Research is False,” noting that most research is better at cataloguing the prevailing bias than discovering new scientific truths. Pioneering medical clinician and author, Chris Kresser, sums it up like this: “In fact, it’s not an exaggeration to say that the history of science has been the history of most people being wrong about most things most of the time.”

The proof is in the pudding. The scientific method is based on replicability. Cause and effect, science holds, is fixed by the laws of nature. In one recent study, however, researchers attempted to replicate the results of 100 published psychological studies and failed to do so in 65 percent of the cases. Researchers from Bayer, likewise, attempted to replicate the research behind sixty-seven blockbuster drugs currently in use and failed in 75% of their attempts.

Philosophy is the natural counter-balance to empirical discovery. By inductively speculating the precise back to the abstract, philosophy will naturally unearth gaps in deductive conclusion that may result from faulty reasoning, or, more commonly, incomplete understanding of causation.

To jettison philosophy in the interest of science, therefore, is to throw away the best opportunity we have to validate and direct empirical analysis and conclusion. And since empirical reality is the reality we live in, it is to open the door to nothing less than our potential destruction.

That the US is a nation divided is beyond dispute. Everyone can see that we are hurtling down a path of eventual implosion that threatens to unravel all of the progress we have made to date as a society and a nation. Only the truth can save us, but truth, we must accept, is not the exclusive dominion of the empiricist.

Science without philosophy is the path to “knowledgeable ignorance.” It is an ignorance built upon a foundation of false certainty that doesn’t just inform our opinion, but defines it. Thought solidifies and hardens, losing its ability to adapt and, as a result, thought and leadership lose the predictive and probative power of wisdom and understanding. We are literally blinded by hollow empiricism.

It is the philosophical void created by imbalanced empiricism, articulated through public opinion polls and statistical analysis, and spread through the mechanics of biased reporting and self-reinforcing news feeds, that is at the heart of our current political paralysis and acute personal divisions.

Why are women, after decades of abuse at the hands of male predators, now coming forward? Why are ethnic and racial minorities finally, after generations of discrimination and abuse, concluding that now is the time it must end? Why are university students only now demanding safe spaces and trigger warnings and seeking to silence speech that is offensive?

The answer, in part, I believe, comes down to the current imbalance between our emphasis on empirical study and measurement and our lack of insistence that such empiricism be validated through the logic of abstraction. Our empirical knowledge has finally overwhelmed our willingness to make abstract excuses and rationalizations. And in the case of misogyny, racism, and intellectual bullying, that is indeed a good thing. We’ve finally cut through the clutter that has historically insulated unacceptable behavior.


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In marginalizing philosophy and abstraction, however, we risk marginalizing productive debate in other important areas of worldview. We risk becoming so certain in our beliefs that we lose all sense of balance and proportion. We lose the ability to meet others half way. We lose the opportunity to exercise diplomacy and to work with other cultures and people with different life experiences in a collaborative and productive way.

The Chinese are not so constrained because they are not just extending their natural empirical perspective in the way that we in Westerners are. They are introducing science and empiricism on top of philosophy, not as an extension of itself. They have, as a result, a balance between science and philosophy that we have lost to empiricism.

The Chinese, despite a population that dwarfs our own, currently enjoy far greater social cohesion and political stability than either the US or the EU. And they have it not because of the autocratic socialist state that the Western media believes is behind all things Chinese, but for the simple reason that Chinese culture and politics retains a balance between empirical progress (e.g., China now leads the world in renewable energy investment.) and philosophical abstraction (e.g. President Xi Jinping’s Chinese Dream).

It is our Western empiricism, at the expense of traditional philosophical thought, by contrast, that is opening the door to the Chinese Century. By returning to their Confucian roots while embracing the empiricism of science, the Chinese will be in the best position to apply the knowledge they unveil through scientific discovery. The West, on the other hand, is likely to fritter away its sizeable early lead in acquisition of empirical knowledge to the certainty of empiricism without abstraction. Or, more precisely, certainty without the guiding hand of doubt.

We will be certain, but will we progress?

You may contact the author at gary@gmoreau.com
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Here’s what legendary Kirkus Reviews has to say about the author’s new book: “More than a guidebook for managers, this is a manifesto for an intellectually deeper – and happier – world of business.” Kirkus Reviews (starred review)
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What Might Orwell Say About Trump’s Trip to China


Author Gary Moreau, aka Avam Hale in fiction

By sheer coincidence, while President Trump and First Lady Melania were being feted by Xi Jinping and Peng Liyuan at the Forbidden City, I was re-reading George Orwell’s dystopian classic, 1984. It was written, of course, in 1949, the very year in which Mao Zedong brought the People’s Republic of China into existence.

Orwell’s book was and is considered a fantastic fiction of foresight so eerily prescient of current events that it feels close to prophetic. And, in fact, every time I looked up from my reading I felt and saw 1984 all around me.

In the end I don’t believe that Orwell was looking forward in time so much as he was looking back. There are many powerful themes in the book, from the permanence of a three-tiered society of the powerful, the want-to-be-powerful, and the 85% of every population that struggles in drudgery to serve the first two segments, to the need for continuous war to consume the inevitable over-production inherent to the post-industrial era.

The primary theme of the book, however, is the power and potential treachery of language and its inherent propensity to be deceptively stripped of meaning in the interest of mass oppression. It was a power that both Stalin and Hitler, who had dominated the news during much of Orwell’s own life, understood and cleverly manipulated to extreme and horrific effect.

Language, of course, is a human convention. It is not natural to the world like sunshine or the animals of the Savannah. We made it up to help us communicate. In so doing, however, we created the world’s most powerful oppressive weapon, a tool that can be turned on us as creator and master. Words have meaning but are not, by themselves, inherently truthful.

The Chinese understand this quite instinctively. In part this mirrors the inductive worldview in which personal obligation trumps everything, including language, and because they converse in a language that is, by its very nature, conceptual and pictographic.

Orwell’s warning, however, is of paramount application to Americans today, both because of our deductive world view which has given us political correctness, but also because the paramount tenets of our culture are not tangibles like filial piety, but intangible concepts, like honor, freedom, and liberty, that can only be understood proximately through words.

Never before, in fact, although I can’t believe Orwell truly foresaw this given that he penned this book forty years before the Internet, has Orwell’s warning been so relevant and so urgent. American culture, politics, and the economy turn on the importance of words more than ever before. Face to face communication among family and friends has declined greatly, our social institutions have steadily lost membership, our politicians communicate in 140 character (now 280 character) Tweets, and our economy is controlled by digital platforms driven by the two-dimensional language of algorithms and analytics.

The backbone of Orwell’s dystopia is the Thought Police, the role of which is “not only complete obedience to the will of the State, but complete uniformity of opinion on all subjects…” Variations of the Thought Police have been around since the beginning of social organization. The difference in Orwell’s 1984 was the existence of the “telescreen,” a variation of television that supported 24/7 bidirectional communication controlled by the government.

Today, of course, we have the Internet. On the surface it is not as organized as Orwell’s Thought Police but it is equally powerful. It draws its strength from the collective consciousness of shamers, critics, and newsfeeds and content farms intent to achieve eyeballs and to disseminate their often virulent propaganda. It harnesses the hysteria of the crowd and the spite of the anonymous.

It is ironic that most Americans would equate Orwell’s dystopia more with China than with America itself. Western media coverage of China is inevitably pre-occupied with the lack of American style elections and the alleged suppression of political dissent, despite the reality that American political correctness suppresses more dissent than the Chinese censors could ever hope to.


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United States Senators Marco Rubio and Chris Smith, both Republicans, and the Chair and Co-chair, respectively, of the Congressional Executive Commission on China, issued a letter prior to Trump’s trip, which CNN entitled, US should hold China accountable on human rights. In it they complain that China “continues to strengthen the world’s most sophisticated system of internet control and press censorship and forges ahead with what it calls ‘internet sovereignty.'” (They seem particularly concerned about China’s decision to block the WhatsApp platform in anticipation of the Communist Party Congress in October.)

This criticism was leveled, of course, in the middle of a US news barrage concerning the mass murder of American citizens by other citizens armed with military assault weapons, the long-tolerated predatory and misogynist behavior of powerful US men, the opioid epidemic, widespread civil rights abuses, travel bans, the suppression of immigration, and a growing income and wealth divide that is both categorically immoral and threatens economic and social stability.

But Orwell, in his prescience, would not have been at all surprised that this was all happening in America were he still alive. One of the lingual weapons of the oppressors in Orwell’s dystopia is blackwhite, a powerful piece of jargon with two contradictory meanings. “Applied to an opponent, it means the habit of impudently claiming that black is white, in contradiction of the plain facts…But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary.”

The blackwhite of America’s attitude toward China, of course, is that China is the oppressor and America is the guardian of liberty, justice, and the equality of all men and women. And, of course, the reality is the reverse. While the Chinese government is indeed sensitive to the negative collective impact of social disruption in a large, diverse, and heavily populated country, the Chinese have far greater freedom than Americans are allowed by the American Thought Police who control, through political groupthink, the dissemination of knowledge and truth.

As Orwell so darkly prophesized, the control of knowledge does not require censorship in an era where all thought and expression is transparent to all. Crimestop, another Orwellian addition to the oppressors’ lexicon, is simple enough to teach to children and can be used by the collective mob not to eradicate distasteful thought, but to preclude it from ever occurring in the first place. “It means the faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, or failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc [the ruling doctrine of the Orwellian state], and of being bored or repelled by any train of thought which is capable of leading in a heretical direction.”

We have gone so far to promote crimestop in America, in fact, that we have created safe spaces on our campuses of higher learning so that students don’t run any risk of being forced to hear something that somehow got by the censors. Lenin himself could not have imagined such a wonderful and empowering accommodation of his ideology.

And while trigger warnings may not carry the direct impact of censorship, they can be more broadly deployed since they do not require any degree of government authority. They represent, in fact, the Thought Police writ democratic, the American mainstream stomping about in Orwell’s symbolic iron-shod boots.

And what is Orwell’s prediction for our future?

“It had long been realized that the only secure basis for oligarchy is collectivism. Wealth and privilege are most easily defended when they are possessed jointly. The so-called “abolition of private property” which took place in the middle years of the century meant, in effect, the concentration of property in far fewer hands than before; but with this difference, that the new owners were a group instead of a mass of individuals.”

But is Orwell describing the future of China or the United States? The Communist Party of China or the American political, economic, and Hollywood elite?

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You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com

Follow on Twitter @gmoreaubooks


Here’s what legendary Kirkus Reviews has to say about the author’s new book: “More than a guidebook for managers, this is a manifesto for an intellectually deeper – and happier – world of business.” Kirkus Reviews (starred review)
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October 18, 2017


Author Gary Moreau, aka Avam Hale in fiction

Wednesday, October 18, 2017, will be an important day for the world. Its ultimate significance is likely to be even greater than the 2016 US presidential election.

On this day, the 19th Communist Party of China National Congress will convene in Beijing to review the Party’s work over the past five years, discuss and set the future direction for the country, and to elect a new central leadership.

During this Congress, it is widely expected that Chairman Xi Jinping will both secure his legacy and tighten his grip on power. It appears an almost foregone conclusion that he will come away from the Congress with a grip on power not seen since the reign of Mao Zedong himself, although no leader will ever quite achieve the historical status that Chairman Mao has.


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Assuming that comes to pass, the world can expect Chairman Xi to double down on the major initiatives of the past five years for the next five, at least. All will be aligned with achieving the Chinese Dream at the heart of Xi’s political, social, and economic agendas. It is a redemptive legacy designed, first and foremost, to assign the Chinese Century of Humiliation (roughly 1850-1950) to the historical dustbin. This task will both influence and define everything else.

That said, here are my predictions for the next five years and beyond.

1. Energy – According to China Daily, more than 2.5 million people currently work in China’s solar power sector. That’s roughly ten times the number employed by the solar industry in the US. And in January of this year China vowed to invest 365 billion USD in renewable power generation by 2020.

Starting in 2019, China’s automotive companies will be required to begin the phase out of cars powered with internal-combustion engines. Some have predicted that by 2030 they will be outlawed completely.

China will continue to take the global lead in renewable energy and climate change. It has to and it wants to. China’s environmental degradation is not sustainable and it believes that the world will ultimately face the same challenges it does as population levels continue to rise. That spells economic opportunity for those companies at the forefront of renewable and alternative energy technology.

2. SOE Reform – Following China’s “opening up”, a process that began in 1989 and ushered in an era of unparalleled economic growth, many state-owned enterprises were privatized. Much of China’s economic growth, and a significant share of its burgeoning personal wealth, flowed from this transformation.

Some of China’s most powerful and influential industries, however, such as banking and financial services, remain under government ownership. By the end of this year, however, the Party has committed to turning all SOE’s into limited liability or joint-stock companies. This may well unleash an even more powerful surge in economic growth at a time when the Western economies continue to struggle for wage and inflation growth. China’s economy, as a result, now the second largest in the world, should equal the US in the next one or two decades.

3. South China Sea – There will be no backing down by China. China will risk World War III to protect its sovereignty. In its mind, it has no option. The West will ultimately be forced to accept this reality, with or without armed conflict.

4. North Korea – In one form or another, the rogue province will ultimately become a sovereign territory of China. China cannot and will not allow South Korea and its American ally to occupy the 880-mile (1,420 km) border it shares with North Korea.

For both environmental and competitive reasons, moreover, China needs to decompress the geographic concentration of its heavy industry (e.g. steel) and find new sources of low cost labor. North Korea will provide a convenient and geographically well-positioned opportunity to address both needs while providing a security buffer to China’s all-important southern region.

5. Regulation – Despite the ownership reforms cited above, government regulation will both federalize and increase in the future. The environment will be regulated with an iron fist. The Chinese Internet will be rigorously defended as both a Chinese asset and a tool for social and economic progress, not a medium for personal political expression. American technology companies will find limited opportunity there.

6. Hong Kong and Taiwan –  Neither will be granted the kind of political independence that Western political activists would like to see. This won’t even be considered. (On the contrary, North Korea will ultimately join them.) And any resulting social unrest, which should be quite limited, will be swiftly quelled.

7. Belt & Road –  Otherwise known as China’s Silk Road Initiative, China will continue to view this as a top foreign policy initiative. China views this as its best chance to economically develop its western provinces and release some of the cultural and political pressure it currently faces there. This will have a significant impact on all of Central and South Asia, including India, Pakistan, and many of the former members of the Soviet axis.

8. Politics –  China will exhibit no desire to export its political model except in matters of national security. Nor, however, will it move to adopt any form of the US political model. To most Chinese, the American model is not an attraction. If they are to borrow any foreign political ideals they will look to the socialism of Scandinavia, with “Chinese characteristics”, of course.

Is this good or bad news for the US and the West? In the end, it doesn’t matter. It will happen. The West, for a myriad of reasons, has lost the ability to shape world events. Phase III of Western imperialism (i.e. I. colonization, II. de-colonization, III. colonial dominance—the global dominance of the former colonies) will inevitably unfold.

As a pragmatist, I accept this reality. It is what it is. And if forced to choose, I believe, on balance, that this can be a period of positive replenishment for the US and its citizens. We will achieve far more by focusing our resources and our energy on renewing the American spirit, revitalizing American infrastructure, and revitalizing opportunity for all American citizens and immigrants, than we will on continuing to pursue inevitably ineffective attempts to reshape the world in our image.

It’s not a digital choice, however. We aren’t limited to putting America or the rest of the world first. Isolation isn’t a realistic option, as China itself has learned. By being a collaborative partner and embracing the diversity of the world, and accepting the inevitable ills of unfettered free markets and their corporate champions (e.g., polarized wealth distribution), we can help to usher in an era of unparalleled global prosperity, peace, and enlightenment.

And it could all start on October 18.

You may contact the author at gary@gmoreau.com
Visit my personal blog at www.gmoreau.com


Here’s what legendary Kirkus Reviews has to say about the author’s new book: “More than a guidebook for managers, this is a manifesto for an intellectually deeper – and happier – world of business.” Kirkus Reviews (starred review)
click here

The latest in the Understanding Series is now available.
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Paris, Beijing & Global Leadership

Author Gary Moreau

In the aftermath of President Trump’s announcement that the US would withdraw from the Paris Climate Agreement, The New York Times ran an article entitled, “Trump Hands the Chinese a Gift: The Chance for Global Leadership.” The article stated, in part, “In pulling out of the Paris climate accord, Mr. Trump has created a vacuum of global leadership that presents ripe opportunities to allies and adversaries alike to reorder the world’s power structure.”

A recent US Defense Department annual report, moreover, noted that China was likely to develop foreign military bases in the future. It already has an outpost in the small African nation of Djibouti (The US also has a base there.), but there is rumor of a major Chinese military presence in Pakistan to support the Belt and Road regional infrastructure initiative that is a cornerstone of President Xi Jinping’s development agenda.

Beijing dismissed the Defense Department report as “irresponsible”, reinforcing the general perception that both stories are essentially negative in perspective. The narrative seems to be that President Trump is both crippling the US and enabling an enemy.

Why? Not why did President Trump do it, but why is China as an emerging power a threatening narrative?

Many people are deeply critical of Trump’s perceived attempts to redefine and constrict the doctrine of globalism that has defined US foreign policy since World War II. The opening line of the Times article noted above reads, “President Trump has managed to turn America First into America Isolated.”

But what is globalism? Does globalism require the US to be the world’s sole superpower? And what about Adam Smith’s “invisible hand”? Isn’t competition supposed to be a good thing to free market advocates?

The irony, of course, is plentiful. The US currently has approximately 800 foreign military bases, or base sites, in approximately 80 different countries. According to The Nation, “The United States probably has more foreign military bases than any other people, nation, or empire in history.”

Many people believe that’s okay because, the argument goes, the US will use its military power responsibly. Wherever you come down on that belief as an American, however, I can tell you from firsthand experience that few outside of the United States share that conviction. And if the objective is global leadership rather than global arm-twisting, shouldn’t we care about what the rest of the world thinks?

If we put the issue in its larger context, I do think that the US, with exceptions, uses its military might with discretion. And our political system and our culture are part of that restraining context.

China, however, offers a similarly restraining context. This is not the Soviet Union, which attempted to put missiles 90 miles from our shores. And it’s not the Third Reich. Virtually all of their disputed territorial claims, including the South China Sea, have arguably been in the interest of defense of China’s sovereignty or to reinstate some perceived historical reality.

Part of that context, of course, is the simple fact that China has been repeatedly invaded by foreign powers. The Century of Humiliation I have talked about before is vivid in the collective Chinese consciousness. Even the youngest Chinese have heard of the Nanking Massacre.

China is attempting to assert global leadership in the arena of climate change. And I believe it is sincere. Having said that, it is also clearly in China’s best interests to do so. They have a huge environmental problem that must be corrected if the Communist Party is to remain in power. And there is a lot of money to be made.

Understanding China is available at Amazon in paper and electronic formats.

Climate change will ultimately be conquered with technology. That’s not to say we shouldn’t do everything we can in the meantime. But climate technology will be the next big technological revolution. That seems almost certain.

And climate technology will provide a much more sustainable and robust economic opportunity than sneakers and toys. I believe that the Chinese are absolutely correct in pursuing it.

Without supporting the decision, I do think President Trump, in a way, is attempting to take a page from the Chinese handbook of promoting their self-interests. The United Nations Green Climate Fund, set up by the Paris agreement to help poor and developing nations deal with the consequences of climate change, has been, to date, funded solely by the United States. The US has given $1 billion to the fund as of May of this year. Russia, China, and India, for their part, have collectively given nothing.

The argument in support of that disparity is that the US also has the largest GDP in the world. And that’s true. But when you consider that much of our government spending is supported by debt that will have to be paid off by future generations, and the fact that income and wealth have become indefensibly polarized in America, that argument doesn’t carry the same weight that it did thirty years ago. In total, we can clearly afford it. That’s not to say, however, that the average American can.

But I think it’s a specious argument anyway. As is the question of whether or not humankind is causing global warming. The more legitimate question, in my mind, is whether or not we are living as environmentally responsibly as we can without materially sacrificing our quality of life? And the answer, I believe, is a resounding “no.”

And in this regard, I think, China offers some valuable lessons. Whether it’s public transportation, high-speed rail, powering buses and taxis with natural gas, recycling, or simply using cloth bags when you go to the grocery store, China does many environmentally responsible things quite well. And while all of these things came to be within a larger context of poverty, development, culture, and the Chinese political system, they are what they are. We can still learn from their example.

I am thrilled to be back in the American Midwest where I can go for a walk without a breath mask and I can drink the water straight from the tap. I know from experience what that is worth in terms of the quality of life. Too many people, I think, take it for granted.

I am not in any way afraid of China’s emergence as a global leader, however. I think it’s a good thing. I may change my mind in the future, but it has demonstrated no intent to expand its influence militarily beyond its own geographic theater to date.

And, yes, “socialism with Chinese characteristics” is built on a one-party political system. The Communists fully recognize, however, that if they are ever driven from power that will be it for them. In the US, by contrast, a losing political party has only to wait until the next election cycle. And that’s even if you accept that we still have a legitimate two party system.

History is not a post card. It is a motion picture. Look at a political map of Europe in time-lapse over the last one thousand years and it will surely make you dizzy.

That observation is not meant in any way to endorse territorial aggression. It is to say, however, that change is inevitable and everything has to be viewed in context. I believe in globalism. It is the reality of the world we live in. But I also believe that if we can convince more responsible governments to assert their leadership and share in the responsibility of moving the world forward, the better off we’ll all be.

Contact: You may reach the author at gary@glassmakerinchina.com

The Law of Unintended Consequence

The author giving a lecture to international business and Chinese culture students at North Central College in Naperville, Illinois..

Be careful what you wish for. It may come true. That’s a sage bit of conventional wisdom that is a variant of the Law of Unintended Consequence. You may get what you want, but it may come with baggage.

Americans have long debated whether or not a businessperson or a career politician would make the best president. However you come down on that question we are in the process of finding out.

Even beyond his flamboyant style, his hyper rhetoric, and his proclivity to Tweet whatever he is thinking at the moment, it would be hard to find a past American president with less political experience than Donald Trump. Even retired military generals who have gone on to the highest political office in America had to negotiate the ladder of ascension in a large and politically competitive institution.

As have most CEOs of most large public companies. Donald Trump, however, spent most of his career at the top of a family business with his name over the door. He had to negotiate some pretty big deals, and that always involves a little bit of political maneuvering, but he has never had to compete for the corner office with his political enemies.

While many Americans have already made up their mind, only time will tell if President Trump makes a good president or goes down in the annals of infamy. I offer no predictions here. This is a blog about China.

One thing we should have learned in the nascent days of Trump’s presidency, however, is that negotiating a business deal and negotiating a diplomatic deal are not one and the same. And it has to do with the Law of Unintended Consequence.

In negotiating a business deal the negotiators often posture to the same extent politicians do. But the language is often different. The volume is different. And the trade-offs are different. The desired objective is generally obvious in the business deal and there are often trade-offs negotiated under the umbrella of the overall agreement.

Understanding China is available at Amazon in paper and electronic formats.

And that appears to be how President Trump and his team plan to negotiate with China. Taiwan, trade, and the South China Sea are just components of one big overall deal defining the relationship of the world’s two largest economies. As Trump would say, “Everything is in play,” just as it would be if he were negotiating the merger of two corporations.

But that is not how diplomacy works much of the time. And the result is that President Trump’s very public negotiation is working very much in favor of the Chinese. They are, I suspect, in no way disappointed by the current state of affairs although, given the extensive political experience that the current Chinese administration has, they will never acknowledge that publicly.

President Trump’s harsh rhetoric on China, of course, has not gone unnoticed in the rest of Southeast Asia. Contrary to pushing China’s neighbors into the protective skirt of the US, however, that rhetoric, and the geo-political risk it suggests, may be pushing China’s neighbors further away from both China and the US, a result that will ultimately favor China and its desire to assume greater leadership in the region.

Dr. Samir Tata, a former intelligence analyst and founder of the International Political Risk Analytics, recently wrote an insightful piece for Forbes Opinion. In it he argued that President Trump’s current rhetoric, along with the US’ unilateral withdrawal from the Trans-Pacific Partnership (TPP), as well as the Obama administration’s lack of interest in supporting the Asian Infrastructure Investment Bank (AIIB) sponsored by Beijing, will likely push key member countries of the Association of South East Nations (ASEAN) toward an official policy of neutrality along the lines of Finland, Sweden, or Switzerland.

In the event of armed conflict between the two superpowers, were such neutrality come to pass, the US could be seriously thwarted in its ability to exert military strength in the region. (Nations which are officially neutral would presumably not allow any foreign military presence on their soil.)

According to Dr. Tata, China is pursuing a much more holistic strategy of trade and investment throughout the region, “having displaced both the United States and Japan as the most important trading partners of the ASEAN countries.” To what extent this strategy will undermine existing security agreements in the region is unknown.

In business, however, while risk is to be avoided, uncertainty can often be employed to your benefit, particularly in a business negotiation. In the world of diplomacy, however, uncertainty is risk. And the harsh rhetoric of the “America First” doctrine is sure to put doubts in the minds of many foreign leaders considering who to dance with.

And that may ultimately prove to be the Achilles Heel of treating diplomacy like a business.

Contact: You may reach the author at understandingchina@yahoo.com. Mr. Moreau is also available for public speaking and the provision of third-party written content on a wide variety of topics for your website or other communications material.

 

 

The Communist Party of China is the big winner in this election

Author Gary Moreau
Author Gary Moreau

Who is the big winner of the 2016 presidential election? The Communist Party of China (CPC). The current American political process – perhaps carnival would be more apt – has provided China with greater future political stability than the CPC could possibly achieve on its own.

In the end, it really won’t matter who wins Tuesday’s election. Half of the electorate will be angry that their candidate lost. And eventually everyone will be angry because the winning half will ultimately realize that their candidate has not delivered anything close to what he or she promised.

As far back as Ronald Reagan, newly elected American presidents have taken a series of politically popular positions with China that were ultimately rescinded or ineffective. President Reagan wanted to re-invigorate Taiwan’s independence. President Clinton vowed to get tough on human rights although there is no evidence that this pledge had any real impact. Numerous politicians have accused China of currency manipulation, but little has come of it.

Secretary Clinton, for her part, appears to favor continuation of the Obama pivot-to-Asia. It simply won’t work. China will eventually have uncontested control over the South China Sea and will use its economic might in the region to enhance its regional power, largely at the expense of the US.

Understanding China is now available at Amazon in paper and electronic formats.
Understanding China is now available at Amazon in paper and electronic formats.

Mr. Trump, for his part, has threatened to slap steep tariffs on imports from China and re-negotiate world trade deals with more favorable terms to the US. And, of course, he is no fan of the Trans-Pacific Partnership (TPP), which Secretary Clinton now opposes after initially supporting it. It doesn’t matter, because the reality is that China is not a party to the TPP and you can hardly have an effective trade agreement in the Pacific Rim without its participation. The US needs to engage China, not isolate it.

Nor does Mr. Trump ever mention that China is the third largest export market for US goods and services. And with the US economy growing at anemic rates, and Europe all but stalled, the reality is that the world cannot afford to de-stabilize China’s economy at the moment. By some estimates, the global economy is already in recession if you factor out the favorable impact of China’s strong, albeit diminished, economic growth.

Ironically, the American Democratic and Republican parties have amply demonstrated that their agendas are no different than the CPC’s. More than anything else they all want to maintain political stability with their leadership in charge. Yes, power.

And while the Democrats and Republicans have virtually assured themselves of mutually assured destruction, to use an old Cold War term, both have handed the CPC the greatest gift of all. They have laid bare all of the scandals, the failures, and the propaganda of the modern American political process. The CPC’s media surrogates now have more than enough fodder to denigrate and disparage the US political process for years to come.

A well-educated Chinese friend of mine once observed that if you use the American democratic model as a template, democracy cannot possibly work in China. “Elections would be an absolute mess. In a country of 1.4 billion people they would take years to conduct and the cost would bankrupt the country.”

Most Chinese would agree. The Chinese system of socialism with Chinese characteristics works for China. As my friend went on to say, “We must have a strong government. Otherwise we will just fight and the country will not move forward.” Like the US, in other words.

My own Chinese wife is witnessing her first US election. She can’t vote, of course, although I hasten to add that she is here legally. Her perspective of the US political process is not refreshing. She thinks it’s a joke and can’t begin to understand why we put ourselves through it. (Many Americans would now agree with her, I suspect.)

In the end, while I know most Americans are anxious for this charade to come to an end, I believe we will look back, long after the votes are counted, and wistfully long for the days before there was a winner and a loser. In the end, there will be neither.

Except for the CPC and other political entities like it that have long been chastised by American politicians for not being “more like us.” Is there anyone who would sincerely wish American style politics upon the people of the developing world now?

It would be inhumane.

Contact: You may reach the author at understandingchina@yahoo.com