Grant Heaslip:

This release isn’t going to make the world a better place, and that shouldn’t be surprising to anyone — Assange’s goal isn’t to expose any particular wrong-doing, but to destroy the very institutions that make the United States a great, if at times flawed, nation. Those who believe in liberal democracy and think that the way to improve the world is to work within the system and expose specific wrongdoing when appropriate — rather than attempting to upend the table — should be calling this what it is: an act of sedition, not journalism or civil disobedience.

I don’t think sedition is the right word; it’s more like warfare through information, but in any case, Grant is right. My disgust with Assange is that rather than try to work through the democratic process to fix the system, he is trying to destroy it—a government that is designed both to protect individual rights and to peaceably make changes to it.

Julian Assange wrote an op-ed for the Australian. He wrote:

His observation perhaps reflected his father Keith Murdoch’s expose that Australian troops were being needlessly sacrificed by incompetent British commanders on the shores of Gallipoli. The British tried to shut him up but Keith Murdoch would not be silenced and his efforts led to the termination of the disastrous Gallipoli campaign.

Nearly a century later, WikiLeaks is also fearlessly publishing facts that need to be made public.

I grew up in a Queensland country town where people spoke their minds bluntly. They distrusted big government as something that could be corrupted if not watched carefully. The dark days of corruption in the Queensland government before the Fitzgerald inquiry are testimony to what happens when the politicians gag the media from reporting the truth.

It’s good to know that Assange thinks so highly of himself.

For someone who claims that he is just a truth-teller, though, he puts out conflicting statements. He says above he’s just telling the truth, but in other places, his motivation is a little different. He’s stated that his goal is to weaken the government’s ability to act:

Or as Mr. Assange told Time magazine last week, “It is not our goal to achieve a more transparent society; it’s our goal to achieve a more just society.” If leaks cause U.S. officials to “lock down internally and to balkanize,” they will “cease to be as efficient as they were.”

That’s not the goal of someone who’s just telling the truth, trying to get information out to the public—that’s the goal of someone who’s declared himself the enemy of the U.S. government.

Assange wants it both ways; he wants to use the Western world’s individual rights to protect himself from persecution while also trying to bring down the very governments he claims the right of protection from. In other words, he’s not only waging war against the government, but he’s too much of a coward to admit it. Someone who not only plays outside of the normal rules, but tries to destroy that very system altogether, should not be surprised when the system sets aside those rules for him.

That doesn’t mean, of course, that Assange’s rights should be suspended to stop him. That would very much be immoral. If he’s violated laws, then he should be brought to justice; if he hasn’t, then he should be free.

In January 2009, just months after the 2008 financial crisis, I wrote a lengthy (9,000 word) study of the financial crisis—analyzing what happened, what caused it, and what I thought we should do to prevent it from happening again.

Below I am publishing the study in its entirety. If you are interested in what what led to the financial crisis in 2009, and enjoy extensive detail, send it to Instapaper—this is for you.

Homeowners and home buyers were convinced home prices would continue to rise. Indeed, the entire market was convinced. People bought homes with mortgages they could not afford, because their home equity would pay for the loan; lenders made loans without verification of the recipient’s income or credit; financial groups poured money into mortgage-backed securities, and Fannie Mae and Freddie Mac bought and securitized an incredible number of mortgages — roughly half of the U.S.’s $12 trillion mortgage market (Duhigg).

A “bubble” was created in the housing industry, a market condition where one industry receives too much investment and, like a plane flying straight up, must stall and come down quickly. Alan Greenspan called it “irrational exuberance,” and that is an apt description — people disregard logic and invest wildly into one industry. For a time, as everyone is investing in it, this works and everyone makes money; but eventually, the rapid rise must turn into a rapid decline.

Usually, bubbles are contained in one industry. This bubble, however, was different. In this case, the entire United States economy and, indeed, the world economy, was involved. For years, the savings rate for U.S. households declined, as home prices rose. Rather than use their income to save, U.S. households used their home equity as their savings, using income they would normally save for consumption.

Moreover, after the technology bubble collapsed in 2000, investment firms moved their capital into mortgage-backed securities, and foreign central and private banks and firms, too, invested in mortgage-backed securities and related securities. China, using the vast dollar reserves it accumulates from trade with the U.S., was one of the largest state investors in related securities, owning $376 billion of Government Sponsored Enterprise-issued securities. Asia as a whole owned $800 billion in 2007 (Timmons).

Consumer spending (which largely fueled economic growth since 2000) and the finance industry (whose lending is integral for the overall economy to function) were directly tied to housing prices. Moreover, the Chinese economy’s fortune is vitally dependent on U.S. consumer spending, and the world had invested in the U.S. housing boom. Thus, because economic growth in the U.S. and world was so dependent on the housing market, the housing bubble’s collapse in 2006 not only threatened the U.S. economy, but the entire world economy.

The resulting stock market collapse in 2008 has caused severe losses in the U.S. and across the world. World stock markets, overall, declined by 48 percent in 2008; China, whose economy is dependent on exports, saw exports decrease nearly 3 percent in December 2008 (“Economic Crisis Hits Exports”); and Iceland’s government, hit by criticism over the effects of the financial crisis, collapsed January 26.

This paper will consider both the short and long-term causes of the 2008 financial crisis and, based on these causes, note the lessons we can derive from them, both for government and companies.

Continue reading →

WikiLeaks’s State Department cables do provide a few more details on how China pressured Google:

But Chinese officials became alarmed that Google still did less than its Chinese rivals to remove material Chinese officials considered offensive. Such material included information about Chinese dissidents and human rights issues, but also about central and provincial Chinese leaders and their children — considered an especially taboo topic, interviews with people quoted in the cables reveal.

Mr. Li, after apparently searching for information online on himself and his children, was reported to have stepped up pressure on Google. He also took steps to punish Google commercially, according to the May 18 cable.

The propaganda chief ordered three big state-owned Chinese telecommunications companies to stop doing business with Google. Mr. Li also demanded that Google executives remove any link between its sanitized Chinese Web site and its main international one, which he deemed “an illegal site,” the cable said.

When governments have such a large role in the economy, they will inevitably use it to punish anyone who threatens their power. You cannot give the state substantial economic control without also relinquishing political freedom, too.

The Economist on China’s growing military strength:

In sum, China’s abilities to strike have soared far beyond seeking to deter American intervention in any future mainland dispute with Taiwan. Today China can project power out from its coastline well beyond the 12-mile (19km) limit that the Americans once approached without a second thought. Mr Okamoto, the Japanese security expert, believes China’s strategy is to have “complete control” of what planners call the First Island Chain. Ultimately, China seems to want to stop the American fleet from being able to secure its interests in the western Pacific.

WikiLeaks Founder Julian Assange comments on his motivation:

Asked what his “moral calculus” was to justify publishing the leaks and whether he considered what he was doing to be “civil disobedience,” Assange said, “Not at all. This organization practices civil obedience, that is, we are an organization that tries to make the world more civil and act against abusive organizations that are pushing it in the opposite direction.”
…
“We don’t have targets,” said Assange, “other than organizations that use secrecy to conceal unjust behavior … That’s created a general target.”

Pushing back against “abusive” organizations—publishing evidence of criminal or blatantly immoral actions—sounds just, and indeed it would be, if that’s what WikiLeaks was doing.

But it isn’t. In the last three major information releases WikiLeaks has made, what crimes, or clearly immoral actions, have they released evidence of? None, as far as I can tell. The worst revelations from the Iraq war release are that the U.S. was aware of torture committed by the Iraqi government—and while this is certainly bad, it’s difficult to hold the U.S. responsible for not doing anything about it besides what we already do: training Iraqi forces to respect human rights and encouraging Iraqi leaders to prevent torture. The Iraqi government is a sovereign government. We cannot enforce our will absolutely¹.

The State Department cables released this week reveals even less. Mostly, it confirms things we already knew—Arab nations are just as afraid of a nuclear Iran as Israel is, for example—and is thus little more than gossip for people involved in politics. The only real revelation is that American diplomats at the U.N. are instructed to collect personal information on officials from other countries.

This, of course, isn’t exactly surprising (spying on other countries, even allies, is just reality). But if this is all WikiLeaks can dig up—that the U.S. is using diplomats to collect information about foreign diplomats at the U.N.—their claims that they are trying to push back against abusive organizations is—excuse me—bullshit.

They aren’t providing evidence of any terrible crimes, which would be a benefit to us all. What this release does do, however, is damage the U.S.’s credibility with the world. This release shows candid statements by foreign leaders, things that were said only because they thought it was in confidence. Honest discussions between nations is necessary for nations to work together and solve crises, and these discussions depend on trust between the two parties that their statements will remain private. This release may undermine our ability to hold honest discussions with other nations for fear their statements will be released.

Intelligence sharing between nations, too, depends on this trust. If we can’t prevent leaks, then countries simply won’t share intelligence with us. If this shakes other nations’ trust in our ability to keep secrets, and reduce how much intelligence they share, our ability to fight terrorism, the wars in Afghanistan and Iraq, and prevent any number of other negative things from happening will be eroded.

What this amounts to, then, is an erosion of our credibility with other nations, and thus an erosion of our power. I don’t think that’s an accident—rather, I think that’s the goal. Assange intends to bring down governments across the world, the U.S. being one of them.

Assange laid out his political goals in 2006. He wrote:

To radically shift regime behavior we must think clearly and boldly for if we have learned anything, it is that regimes do not want to be changed. We must think beyond those who have gone before us, and discover technological changes that embolden us with ways to act in which our forebears could not.

Firstly we must understand what aspect of government or neocorporatist behavior we wish to change or remove. Secondly we must develop a way of thinking about this behavior that is strong enough carry us through the mire of politically distorted language, and into a position of clarity. Finally must use these insights to inspire within us and others a course of ennobling, and effective action.

This is from a piece titled “Conspiracy as Governance,” where he first argues that authoritarian regimes (the U.S. being a fine example for Assange) use conspiracy as a central means of planning for maintaining and strengthening their authoritarian power, and then lays out a theory of how conspiracies work so they can be defeated.

Conspiracies depend on communication among the conspirators, Assange writes, and modern communication technologies have made them much more efficient. So what better way to eliminate their ability to conspire than to chill their ability to communicate?

Assange isn’t saying that the U.S. has committed crimes, and those responsible should be brought to justice (which releasing documents—”whistleblowing”—would help do): he’s saying that the U.S. government is an authoritarian regime, and thus must be defeated.

This puts a strikingly different spin on what WikiLeaks is doing. They are not releasing documents to try to bring criminals to justice and reform the system (their documents don’t provide evidence of any substantial crimes, or more specifically, breaking the law as fundamental policy), but rather to try to bring the system down altogether. WikiLeaks is waging war on government.

That sounds crazy, and that’s because it is. Assange’s goal is to bring down the government because he sees it as unjust. Since it is not wholly transparent, as he believes organizations should be, it must be defeated.

That’s worrying. This isn’t the work of someone who is simply concerned with shining the light of world attention on crimes committed in secret; this is the work of someone who’s trying to destroy our very institutions.

Whether he will succeed or not is an entirely different question. He will—already has—do substantial harm to the U.S.’s credibility, and in diplomacy, that’s important. His plot will not succeed, because it doesn’t weaken our government’s ability to operate enough. But this means he should be treated differently. Assange is not merely a civilian utilizing his individual rights to point out crimes; he is an enemy of the U.S. using the rights granted to him to attempt to destroy the very institution which protects those rights.

He is not a truth-teller, he is not a hero. He is a man attempting to use stolen information to re-make the world in his own ideological image. He is not Woodward and Bernstein, revealing crimes; he is closer to the Joker, pushing buttons just to see what happens.

1. And if we tried, I suspect many of the people complaining the loudest about this would be screaming just as loud that we are violating their sovereignty [↩]

David Leonhardt:

To continue growing rapidly, China needs to make the next transition, from sweatshop economy to innovation economy. This transition is the one that has often proved difficult elsewhere. Once a country has turned itself into an export factory, it cannot keep growing by repeating the exercise. It can’t move a worker from an inefficient farm to a modern factory more than once. It cannot even retain its industrial might forever. As a country industrializes, workers will demand their share of the bounty, as has started happening in China, and some factories will start moving to poorer countries. Eventually, a rising economy needs to take two crucial steps: manufacture goods that aren’t just cheaper than the competition, but better; and create a thriving domestic market, so that its own consumers can pick up the slack when exports inevitably slow. These steps go hand in hand. Big consumer markets become laboratories where companies know that innovations will be tested and the successful ones richly rewarded. Those products can then expand into countries with less mature consumer markets. Look at the telephone, the personal computer and the iPhone and iPad, all of which were designed in the United States and are now sold around the world.

Fabulous piece by Leonhardt for the New York Times. Send it to Instapaper and read it all when you have the time.

China’s development, thus far, has been based on an abundance of cheap labor. This has allowed China to become the world’s factory, manufacturing goods for sale in other countries. But as Leonhardt so nicely explains, you can only gain economic efficiency by transferring a worker from farm to factory once.

There’s two pressures working against China’s cost advantage. First is supply—soon, they will run out of new workers in the east, and companies will have to move west. This is already happening, with Foxconn doing just that. On the face of it, this sounds like a good solution; the west is undeveloped and full of people yearning for better paying work, but the problem is that China’s west is landlocked. Manufacturing goods in the west, unlike manufacturing near the east’s ports, requires moving them to port using comparatively expensive rail or truck. The west will never be the panacea China experienced in the past few decades. This will force companies to pay higher wages. Megan McArdle, who just traveled to China, says she’s heard labor costs rising by fifteen to thirty percent in major urban areas.

The second pressure is changing expectations. As more people move into the middle class, or just begin to move toward it, they are expecting higher wages and better treatment. A strike by workers in May at a Honda transmission factory in southern China reflects this.

This means that, at some point in the coming 10-15 years, China must transition from an export-dominated economy to a consumer-based one. This is a difficult shift, but it must happen. Leonhardt explores how the Chinese are trying to do so—by laying the foundation for a better-educated populace and by encouraging creative thinking and developing new ideas.

What should concern China just as much as their lack of innovation is that China is very much two nations. When I visited eastern China in 2008 and 2010, what struck me the most was how much it felt like a developed nation. We often hear how poor China is, but you wouldn’t know it from visiting cities in the east. Beijing’s, and especially Shanghai’s, streets are filled with nice cars and the sidewalks with well-dressed people shopping, lights and billboards everywhere. This isn’t limited to the largest cities, either.

But China is a poor nation. While the east is relatively well-developed, the west is very poor. In this sense, China is, increasingly, two nations, east and west, rich and poor. China’s great challenge, then, is not just to transition from a manufacturing and exports economy into a consumer and innovation economy, but also to bring development to the west as well. China’s west is already the source of most of the country’s instability, so this poses a catch-22 of sorts for their leadership: first, instability makes it even more difficult to bring companies (and thus jobs) westward, but it also means they need more economic growth to quell anger.

Zhao Lianhai was recently convicted in a Beijing court of attempting to use a “popular issue” to incite a mob and disrupt the social order.

What did he do? Zhao’s son was one of 300,000 children that were sickened by chemically-tainted milk powder—his son suffers from kidney stones, other children urinated blood and at least six children died—and so he led a campaign for justice against the company responsible and proper compensation for resulting medical expenses. In China, there is no proper court system to bring civil charges against companies, and so publicly pressuring the central government (read: the Communist Party) is the only means of seeking restitution. And so he did.

Susan Jakes writes:

But, after Zhao and other parents protested that the government’s compensation plan was inadequate to cover the cost of their children’s ongoing medical care, they began to receive threats from local police. Zhao’s Web sites were repeatedly shut down, and the group’s lawyers received phone calls from authorities urging them to drop the case. In late 2009, Zhao was officially arrested; he has been in police custody ever since.

Zhao’s campaign had been based on the widespread belief in China that while local officials or individual businesspeople may engage in venal or criminal activities, the central government, once informed of the truth, will see to it that justice is done.

The company responsible, the Sanlu Dairy Group, was protected by local government and party officials in 2008 from these charges because the company was good for their local economy and they were benefiting from them being based there.

When the state is directing the economy, overlap between the two necessarily happens, to the detriment of individuals.

There’s a fascinating look at a Western freelance journalist’s stint in China as a transcriber for conferences during the 2008 olympics. It’s one, if innocuous by the PRC’s standards, insight into how China’s censorship works:

I remember Ling laughing hysterically during a press conference on the weather. “To some extent,” said an official, “we can control the weather.” When she edited my transcript, she sighed as she tweaked his words to make him sound a little less dumb.

The Obama administration is shifting course in its policy on China:

“This administration came in with one dominant idea: make China a global partner in facing global challenges,” said David Shambaugh, director of the China policy program at George Washington University. “China failed to step up and play that role. Now, they realize they’re dealing with an increasingly narrow-minded, self-interested, truculent, hyper-nationalist and powerful country.”

To counter what some officials view as a surge of Chinese triumphalism, the United States is reinvigorating cold war alliances with Japan and South Korea, and shoring up its presence elsewhere in Asia. This week, Secretary of State Hillary Rodham Clinton will visit Vietnam for the second time in four months, to attend an East Asian summit meeting likely to be dominated by the China questions.

This is quite similar to the Bush administration’s strategy, which was, especially during the first term, quite distrusting of China. They attempted to surround China with U.S.-friendly countries.

The Obama administration has, rightly, decided to challenge the PRC on a number of issues. Setting aside exchange rates, the administration has pushed China on territorial disputes in the South China Sea and we had (until this week) scheduled naval exercises with South Korea in the Yellow Sea. This is important because as China rises, they could replace the U.S. as the dominant power in Asia, and this would be incredibly destabilizing.

Since the U.S. is an outsider to asia, it also acts as an objective arbiter between nations. The U.S. doesn’t have a direct interest in territorial disputes—it’s only interest is in maintaining stability. This neutral position is a benefit for asia, because it provides a framework for asian nations to cooperate through.

If China replaces the U.S. as the region’s dominant power, this will no longer be the case. China certainly does have a direct interest in any and all of these disputes, and as such may (and from their recent actions, will) use their position to benefit them. This throws the region’s balance askew. If there is no neutral framework for nations to work through, then each nation will be on its own. This very well could lead to a rise in conflict and, conceivably, military conflict.

There is a fine line between pressing China and keeping our current position, and pushing China into a corner. While talking with a friend of mine in China about China’s disinterest and distrust of the world, I theorized that it may be because historically, China has been a dominant power. While other empires rose, weakened and faded away, China’s remained, and the world beat a path to them for trade. Therefore, despite losing this dominant position in the eighteenth and nineteenth centuries, China may remain beholden to that same view of themselves, and thus to a position that other nations are lesser nations than them.

She disagreed. She said that their distrust isn’t a result of a feeling of superiority, but the opposite: inferiority. China’s final dynasty, the Qing, began declining in the eighteenth century, and that process was completed in the nineteenth when they were forced open by European nations and colonized. Their decline and colonization was profoundly traumatizing for China, and this experience still lingers in the nation’s consciousness.

So we must walk a fine line between legitimately pressing China and recalling the West’s abuses during the eighteenth century. There is a strong nationalist force in China, and this would lead to dramatic pressure on China’s leadership and would necessitate them to respond.

The Chinese Communist Party’s newspaper, the People’s Daily, ran an article criticizing calls for Western-inspired political reform, obliquely rejecting Premier Wen Jiabao’s call for more reform. A New York Times article captures how very odd this is:

A Beijing scholar of the leadership, Russell Leigh Moses, called the editorial “a reminder to cadres that the party will set the tone and terms of the debate on political reform.”

Not only has the party censored Wen’s remarks on reform, but it is apparently openly arguing against them, saying that any political reform should should strengthen leadership within the party.

Wen Jiabao is Premier of the People’s Republic of China’s State Council, so he is, ostensibly, head of government. Normally, since they lead the government, this would mean that Wen and President Hu Jintao are the country’s leaders.

But China doesn’t have a system of government that is at all familiar to us. While their titles are similar (“Premier,” “President”), the government isn’t really the nation’s sovereign body. The party is. The above quote from the New York Times article reflects this perverse arrangement; the government doesn’t lead the nation, the party does.

What’s even more odd, though, is Wen holds a large amount of power within the party, too. The party is controlled by the Politburo Standing Committee (which is headed by President Hu)—and Wen ranks third on the Committee.

This is an excellent example of how perverse China’s political system is. The government’s second most important leader, the Premier and head of the state’s cabinet, can be censored by a political party, and can be challenged by anonymous individuals within the party. Was this directed by Hu Jintao or his supporters (who is more conservative then Wen), or are there other elements within the party contesting Wen’s push for liberalization?

That raises an interesting question: who exactly is in charge of the CCP? That isn’t at all clear.

University of Munich professor Hans-Werner Sinn nicely explains how Chinese capital allowed us to enjoy not saving any of our income:

Despite its withdrawal from financing the US government, China remains the world’s largest net capital exporter, a position that it has held since 2006. In 2007 and 2008, China exported on average about $400 billion of capital annually. The US, which at the time needed annual capital imports of $800 billion in order to offset the near total cessation of private savings, received the lion’s share of this capital. The unwillingness of the Chinese to consume enabled Americans to build new houses for many years on borrowed money and to maintain a level of consumption that the US economy was unable to finance on its own.

To be sure, the Chinese always restrained themselves from private real-estate financing in the US. They bought only government paper and securitized real-estate instruments that were issued by the semi-public bodies Fannie Mae and Freddie Mac. Direct real-estate finance via private channels came mainly from other countries – Germany, for example. Nevertheless, China helped the US to achieve a higher standard of living by making money available to government authorities that would otherwise have had to come from American taxpayers.

Given this history, it is a bit shabby to reproach China now for its exchange-rate policy – a policy that enabled the US to live beyond its means for so long. Rather than coming at the expense of the US, as is constantly claimed, it was the renminbi’s low valuation that allowed Americans to dream their American dream of universal homeownership. Imports of inexpensive Chinese products freed up capital and labor in the US for a dramatic expansion of the housing stock – which led to a sharp rise in the American standard of living.

Actually, I think he weakens his argument unnecessarily. Not only did China provide funding for the GSEs, but since the GSEs owned four trillion dollars of an eleven trillion dollar mortgage market, they helped fund our housing bubble, too.

But he’s right that China’s central economic policy since the 1990s—develop infrastructure and focus on exports—made China flush with cash that it needed to invest somewhere. China’s policy to keep their currency cheap relative to the dollar was integral for their economic policy. Their cheap currency, which reduced the price of their exports to make them more competitive, led to large dollar reserves which funded our lack of saving and housing boom, but it also provided affordable Chinese products for Americans, which effectively increased our standard of living.

China didn’t somehow screw us, we screwed ourselves. They provided the funds for us to live extravagantly, to take from our future so we could enjoy ourselves now, and we did.

China didn’t invest their dollar reserves in Fannie Mae and Freddie Mac because they wanted to inflate our housing market; rather, they invested in it because they provided a steady, guaranteed return. The GSEs provided a nice return without any risk, because they had the implicit backing of the U.S. government. Our housing policy created that opportunity for them to invest in—our policy that homeownership should be cheaper, and that people who can’t afford to own a home, should. We decided that rather than investing in new industries and innovation, in our futures, we plowed private and public capital into funding a housing boom.

That’s the choice we made, to invest in what amounts to a ponzi scheme, and now we are suffering as a result. This isn’t China’s fault, and it isn’t their responsibility to bail us out. It is our responsibility, and we must fix it. Blaming them isn’t going to help.

Retired Chinese Communist Party (CCP) officials have issued a letter calling for actual free speech:

“This kind of false democracy of affirming in principle and denying in actuality is a scandal in the history of democracy,” said the letter, which was dated Monday and widely distributed by e-mail.

Great news, and they say they would have liked to reference Liu Xiaobo’s imprisonment, but didn’t for fear the government (or, more accurately, the CCP) would have stopped the letter’s circulation.

This story, moreover, provides an excellent example of just how twisted China’s system is:

Censorship has become so reflexive and restrictive that even passages urging political reform were expunged from official media reports on speeches by Premier Wen Jiabao, the letter said. Wen has drawn attention in recent weeks with a series of unusually direct calls for the communist system to evolve.

“Not even the nation’s premier has freedom of publication,” the letter said.

This sounds absolutely bizarre (and it is), but it’s because in China, the government itself (the PRC) is, more or less, a front for the CCP. The CCP decides what the government’s policy is, is and isn’t allowed to be discussed, whether party officials will be charged with crimes, and who will serve in state-owned companies. China doesn’t merely suffer from a quasi-totalitarian government; they suffer from party dictatorship.

Shawn Blanc envisions a MobileMe more integral to iOS:

Imagine if you will what a merging of Dropbox and MobileMe might look like. Something simple and completely expected, I suppose. It would be free, it would sync and share info and files, and it would let other apps use it for syncing. Imagine setting up your iPhone with your Apple ID once, and then any app that has a Mac and/or iPad counterpart would sync. Sounds like mobile bliss.

That’s exactly what I’ve been hoping for since MobileMe was released: that iDisk is fully integrated into iOS, so we never have to worry about whether a file is on out phone or computer: it’s on both, automatically.

Shawn thinks Apple should make MobileMe a free service, so it can not only be the iPhone’s web-based storage, but also what applications would use to sync their user data. That’d be a dream.

Apple should do this, and I think they will. Since competition from Android is so strong, they need to make the iOS platform as strong and easy to use as possible. Currently, syncing is a weak spot for the platform; developers have no good, simple way to build syncing into their applications. They can use Dropbox, which works well, but it’s clunky to ask users to sign up for another service; they can use MobileMe, which only a small subset of their users have; or they can roll their own, which is difficult. Apple needs to do what Shawn’s proposing.

Using Japan’s development as an example of what China shouldn’t do, Ethan Devine argues China must shift from exports and infrastructure to a consumer-driven economy. He points out, though, their governing model is incompatible with this kind of economy:

Yet it will likely have a hard time making such a shift. Dynamic service sectors are not generally compatible with central planning because service economies are naturally discombobulated. Technocrats can calculate where a new bridge or airport will have the greatest positive impact and then build that bridge or airport — but it is much harder to dictate from on high the creation of the next Facebook or to manifest a thriving small business sector.

It’s a great piece and I recommend reading it in full.

That is China’s main challenge over the next 10-20 years—their form of government not only isn’t ideal for a consumer-based economy, but it is fundamentally opposed to it. Currently, the Chinese economy is government-directed, with bias toward state-run companies. There is little companies can do without the support of local, regional or national government.

That’s difficult to change, but it will have to. Small entrepreneurial firms require freedom to operate and that freedom doesn’t really exist in China. It’s antithetical to the Chinese Communist Party’s main belief and philosophy: we are in control of the country and its direction. Ultimately, this switch will mean the CCP abdicating its power, and the government loosening its grip.

This doesn’t mean that, in the shorter term, the government will not be successful in creating state-run consumer markets. I think they will. But this isn’t a long-term strategy—an economy cannot be both centrally-planned and dynamic.