2008-12-24

Chinese dishonesty

Freakonomics publishes a Q&A with Leslie Chang, author of a recent book Factory Girls, a closeup of the lives of workers in China. I found the following a fascinating part of the dialog:
Q. You followed students for a semester at a school that teaches factory girls how to become “white-collar” workers. A major part of the curriculum teaches students how to lie effectively. How do the concepts and values being taught in these classes affect the manufacturing economy that these women make up?

A. A major part of the curriculum involved how to lie your way through job interviews into an office position. This ultra-pragmatism is pervasive in Chinese society today; people are less concerned with abstract notions of right and wrong than with getting things done. In economic terms, this fosters a business climate in which companies copy each others’ products, steal employees and business plans, and compete ruthlessly over tiny profit margins. But with little trust or sense of long-term planning and investment, they find it hard to grow and develop their businesses.

This system also takes an emotional toll on individuals. Everyone I knew in Dongguan had stories of being cheated and robbed and lied to, and over and over people told me, “You can only rely on yourself.” But even though this is a world marked by corruption and deceit, it is at the same time highly functional. It just functions by its own set of rules.
The latter two sentences (my italics) might be interpreted as bias against the unseen. I believe Leslie Chang when she says a world like that is functional, but just how much more functional could it be if one didn't have to expect outright deceit at every turn?

Here's another "gem":
Self-help gurus like Ding Yuanzhi have a large following among China’s migrant workers. Yuanzhi, whose book Square and Round has sold around six million copies, gives the following advice to migrant workers:

Now I will talk about copying. I think copying is very important. Everyone always talks about how innovation is important. But you need to invest a lot of time to innovate and the risk is high. Why not take things that have already been proven to work in other places? That is copying.
With respect to this paragraph, we could observe that economic growth has two components: originating new ideas, and spreading them. There is no growth without either. The two mechanisms, however, are partly in conflict. What good is working hard at originating an idea, if it will be copied so fast that you can't take advantage of it?

What Ding Yuanzhi is proposing here is maximizing the spreading of ideas in such a way as to disincentivize the origination of new ideas in the first place. This can only work if there's another market, say like the United States, which respects origination of ideas, and provides innovators ways to get returns on their investments at least there.

There are claims that the United States was quite like this in the 19th century as well, and that such endemic hustling is merely a phase in the evolution of a high-growth economy. But is it a necessary phase?

Would the Chinese not benefit more if they could actually trust each other? Would they not receive more investment if foreigners could trust them?

Would the Chinese not receive investment of a different quality, allowing them to perform more demanding and higher paid tasks, if they could be trusted not to sell pretty much any plans and information they can access, to pretty much anyone?

Endemic dishonesty is a burden. The problem is, it is a burden that's embedded in their culture, and it's a burden that a single-party system promotes. When allegiance to the Party is a pre-condition for any career, you can be sure that people who have careers are people who fake their allegience.

Create a system in which honesty is a handbrake, and guess what; it's going to be populated by the dishonest.

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