William Gibson:

The surprising thing about it — I almost said the insidious thing, but I’m trying to be anthropological — the surprising thing, to me, is that once we have our gramophone, or iPad, or locomotive, we become that which has the gramophone, the iPad, or the locomotive, and thereby, are instantly incapable of recognizing what just happened to us, as I believe we’re incapable of understanding what broadcast television, or the radio, or telephony did to us.

I strongly suspect that prior to those things we were something else. In that regard, our predecessors are in a sense unknowable. Imagine a world without recorded music: I always come to the conclusion that it’s impossible for me to imagine that, because I have become that which lives with recorded music.

Fascinating insight. If you want an immediate, but less stark, example, try going back to a dumb phone from your iPhone. When I’ve done it while between iPhones, it’s surprising how much having an always-connected device in my pocket that makes any and all information instantly and easily accessible changes how I think. After a few days, I stopped thinking about what was happening on the web; or while out somewhere, and a random question came up (“When was Mars discovered?”), I tried to rack my brain for the answer rather than reach into my pocket. Now, because there is an iPhone always in my pocket, it sort of feels like I have an invisible tether between my brain and the web.

Perhaps that’s just me, I don’t know. But in many ways, relying on a dumb phone was freeing. I couldn’t check my email, Twitter, or news while away from a computer and so I stopped thinking about it. I have a feeling this perpetual connectedness prevents some thoughts from entering my mind, because I think less and check Wikipedia more.

A UK teen was banned for life from visiting the U.S. because he sent an email to the White House calling Obama a prick.

That’s our government.

Qu’ran-burning Pastor Terry Jones:

“Of course it’s insulting, of course it’s not a nice thing to do,” Jones, a former hotel manager, told “Nightline’s” Terry Moran. “But this is a very dangerous religion. If we don’t do it, when do we stop backing down?”

On the road leading up to the church are a series of signs that read, “Islam is of the Devil.”

Idiot. Odds are he, and his followers, have never read the book they’re burning. If so, he might have come across this, not very far in:

62. Those who believe (in the Qur-?n),
And those who follow the Jewish (scriptures),
And the Christians and the Sabians,—
Any who believe in God
And the Last Day,
And work righteousness,
Shall have their reward
With their Lord: on them
Shall be no fear, nor shall they grieve.

Words of the devil, apparently.

Chinese and Japanese youth are forgetting how to write characters:

Yet aged just 21 and now a university student in Hong Kong, Li already finds that when she picks up a pen to write, the characters for words as simple as “embarrassed” have slipped from her mind.

“I can remember the shape, but I can’t remember the strokes that you need to write it,” she says.

They’re forgetting because they communicate mostly by mobile phone and computer now, which use pinyin. When users type in a word, the device gives them a selection of characters that match. It’s faster to use pinyin than it is to draw characters so most people use it. It only requires people to recognize characters, rather than remember each character’s strokes.

Sad. Chinese is a beautiful language to write in, but characters might not be around much longer.

The Economist has a excellent, in-depth look at David Cameron’s reforms in Britain:

Where does this radicalism come from? Ruddy-faced and shire-bred, Mr Cameron looks and sounds like the stolid, middle-of-the-road High Tory he is often thought to be. Part of the answer lies in the company he keeps. Among the most evangelical of the Tocquevillian Tories is Steve Hilton, Mr Cameron’s strategist. A former advertising man who grew intrigued by the potential of businesses and other non-state organisations to bring about social change, he joined his old friend’s campaign to remake the Conservative Party.

Al Qaeda is recruiting Sons of Iraq:

A second Awakening Council leader, Sheikh Moustafa al-Jabouri, said disaffection among his ranks had reached breaking point as US combat forces increasingly depart, with most of his men not having been paid for up to three months and now facing a relentless recruitment drive by local al-Qaida members.

The “Sons of Iraq” are a Sunni militia recruited and paid by the U.S. military beginning in 2006 to protect their neighborhoods from Shia and Islamist attacks. This strategy was likely just as, if not more, responsible than the surge itself for the remarkable reversal in Iraq in 2006-07.

This is very worrying. If Al Qaeda successfully weakens the Sons of Iraq as the U.S. draws down its force, Iraq will very quickly go back to where it was in 2005.

Jon Lee Anderson has a fabulous piece in the New Yorker on the Green Movement in Iran:

One Iranian, who asked to remain anonymous out of concern for his safety, described the movement’s status. “Despotism works,” he said. “That’s what this situation shows. The reformist movement is over. The middle classes aren’t willing to die en masse, and the regime knows this. It has killed and punished just enough people to send the message of what it is capable of doing. The reformist leaders and the regime have a kind of unspoken pact: ‘Don’t organize any more demonstrations or say anything and we’ll leave you alone. Do anything and we’ll arrest you.’ It’s over.”

Another Iranian, though, disagrees:

“The frustration is almost too great to bear. People feel so robbed, and their dignity and hopes are so offended. Every day, it is so painful. It hurts. This feeling will not just go away. The Green Movement represents this feeling, and it can’t just disappear. Somehow, maybe in another shape, it has to reëmerge.”

George Friedman:

It is difficult to know what the Russian team was up to in the United States from news reports, but there are two things we know about the Russians: They are not stupid, and they are extremely patient. If we were to guess – and we are guessing – this was a team of talent scouts. They were not going to meetings at the think tanks because they were interested in listening to the papers; rather, they were searching for recruits.

Sounds right.

Labor is getting more expensive in China, so manufacturing companies are racing to find ways to reduce costs:

But what it does not reveal is that manufacturing in China is about to get far more expensive. Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones.

Desperate factory owners are already shifting production away from this country’s dominant electronics manufacturing center in Shenzhen toward lower-cost regions far west of here, even deep in China’s mountainous interior.

That’s precisely what I’ve hoped would happen. China is a nation of contrast—while the east is rich from manufacturing and exports, the landlocked western interior of China is still incredibly poor. China is almost two nations, one developed and one developing.

But development based on unskilled, cheap labor inevitably leads to higher standards of living and increasing wages. Over time, the “cheap” part of it disappears, so manufacturers move elsewhere in search of low costs. As this happens, areas that were dependent on unskilled labor for economic growth must transition toward skilled labor. This is China’s largest challenge—their incredible economic growth is a result of labor that’s laid dormant for decades suddenly coming online all at once, but they must now move from unskilled to skilled labor. In other words, they must move up the supply chain from merely putting things together to manufacturing intricate parts and to even designing them.

As manufacturers move toward other regions and countries with lower wages, the same process plays out. I’m hoping this will have the same effect on China’s interior, but there are natural barriers for it. Using unskilled labor in China’s east is easy: it’s close to the coast, so moving goods to port is cheap. The west doesn’t have this same advantage. Anything manufactured there will have to be moved by truck or rail to the coast.

A writer on the Pileus blog wrote today:

In my view, the United States can live with a nuclear Iran, just as it currently lives with a nuclear Pakistan, a nuclear China, a nuclear Soviet Union Russia, and so on.

Perhaps in a vacuum the U.S. may be able to live with a nuclear Iran, but Arab nations can’t and thus we can’t, either.

Let’s just think about what a nuclear Iran would mean for the Middle East. Iran sits along the Persian Gulf, next to Iraq and Kuwait, and is just a short distance from Saudi Arabia. Those three countries account for an incredible percentage of the world’s proven oil reserves—Saudi Arabia has the largest reserves in the world and Iraq and Kuwait have the fourth and fifth-largest proven reserves, respectively.

A nuclear Iran would make the Middle East its plaything. Iraq and Kuwait would be theirs for the taking, Saudi Arabia’s oilfields would be just a short jump away, and the other Arab nations would be subject to Iran’s will. By controlling those oil reserves, the Persian Gulf (where it flows out of to the rest of the world) and taking the rest of the region into its sphere of influence, Iran could dictate to the world.

Arab countries are just as, if not more, afraid of a nuclear Iran than the west is. They would lose control of their nations, and they do not want that to happen. A nuclear Iran would set off an arms race across the Middle East—they will try to develop nuclear weapons as quickly as possible to eliminate Iran’s advantage. This may be enough to keep Iran in check, but tensions would be terribly high. The last thing we want is a nuclear Middle East.

Those are the options presented by a nuclear Iran, and none of them are acceptable to the U.S. or the world. This isn’t as simple as pointing to other nations who have developed nuclear weapons without threatening the U.S.

Stanford professor and entrepreneur Paul Romer has a fascinating idea for how to turn developing nations into developed nations: charter cities. His model for these cities is British-controlled Hong Kong. The host developing nation will lease land to a developed country which will govern it, providing stable, business-friendly rules.

Sebastian Mallaby has a fantastic piece in the Atlantic on Romer’s idea and his push for it. In the introduction, Mallaby describes Lübeck, a Germanic town built by Henry the Lion into a prosperous city in the 12th century:

The stultifying feudal hierarchy was cast aside; an autonomous council of local burgesses would govern Lübeck. Onerous taxes and trade restrictions were ruled out; merchants who settled in Lübeck would be exempt from duties and customs throughout Henry the Lion’s lands, which stretched south as far as Bavaria. The residents of Lübeck were promised fair treatment before the law and an independent mint that would shelter them from confiscatory inflation. With this bill of rights in place, Henry dispatched messengers to Russia, Denmark, Norway, and Sweden. Merchants who liked the sound of his charter were invited to migrate to Lübeck.

This is an apt description of what Romer hopes to build. This concept assumes that the main limitation on growth in developing nations isn’t natural resources or human capital, but capricious, inconsistent and controlling governing. Businesses cannot develop because the government suffocates them, or fits of business-friendly rules are quickly scrapped when political winds change.

That’s precisely right and his idea is intriguing. It raises a whole host of issues which Mallaby nicely discusses and I may write about them, but this makes something else clear: it isn’t the rules that is the important part. It’s the environment they create.

Simple, limited and consistent regulation allows for a clean slate. There’s no mental and physical overhead dedicated toward understanding arcane and complicated rules, and arbitrary political dealings, to do business and create things—you just do it. That’s what America was when Europeans began emigrating to the continent—a land where there were no priests, lords or kings to please, nor limiting vestiges of your reputation. It was a dangerous place to live, but America promised a new life with unlimited opportunity. There were no artificial constraints.

The east coast soon developed, with the rules and controls that come along with it. But the west always beckoned, that same feeling of unlimited opportunity.

It’s that spirit that is important for development. It struck me while reading this that it isn’t just the developing world that needs this feeling. We need it again as well.

In 1900, government spending accounted for 20 percent of total GDP; in 2010, it is almost 45 percent. Our income tax law is mind-numbingly complex. Government has assumed responsibility for not only controlling the economy’s general tone, but specific industries, like the housing market, and guaranteeing the safety of certain companies that are too important to the nation to fail. The government not only has its finger on the economy’s pulse, but around its heart and neck. Washington, D.C. is the new arbiter of economic success.

James Madison’s great genius in construction the Constitution was not just in its separation of powers, but reserving wide power for the states. By allowing the states to function freely (within the context of the federal government’s reserved powers), states could choose their own political and economic path. By allowing states to manage themselves how they choose, they could experiment without affecting the entire nation.

That’s no longer true and hasn’t been for decades. As the federal government becomes the dominant body in society, it makes what was once flexible and agile—the many states—into something slow and rigid. The federal government cannot experiment because failure would affect the entire nation. But worse, this process has shifted societal responsibility from the local and private spheres into the national and public spheres. Poverty is no longer our individual responsibility, for us to work with friends in our communities to alleviate, but a national one. Depending on oil for powering our economy isn’t something for individuals to solve by forming new ventures that succeed based on economic viability, but a problem for Congress to solve by choosing what alternative form of energy, and existing companies, will succeed. Nothing is my problem anymore. It’s the government’s.

That’s eliminating personal responsibility. When the government is responsible for everything, there’s no dynamism, no motivation to create something for ourselves.

We need a new frontier.

Jonathan Fenby comments on China’s currency policy:

It has to bring the economy back from the runaway 12% growth reported early this year to a sustainable level of around 8% which would create sufficient jobs, keep the population happy and underpin the Communist party’s claim to be the only force that can ensure material progress. It needs to rein-in industries whose excess output adds to the perennial problem of over-capacity, but without creating mass unemployment. It needs to guard against inflation and boost wages.

China’s economy is still heavily dependent on exports. Their incredible economic growth, and thus employment for the population, is driven by it. Allowing the Yuan to appreciate as much as U.S. critics desire would severely harm their export sector, so it isn’t an option.

China does need to become a more self-dependent economy, which entails building a larger and sustained middle class (so consumer goods can be a larger part of the economy) and moving up the supply chain into a product design role.

There still is, though, a huge portion of the population just looking for a steady job of any sort. While the east of China is well developed and in some parts feels very much like a developed country, the west of China is also very much a developing country. The incredible amount of migrant workers in China’s eastern cities bear this out. The CCP knows China’s history well, so it knows that the largest threat to its power is poor economic conditions. They want to continue developing the west and secure the east’s affluence so their power isn’t threatened.

Allowing the Yuan to significantly appreciate against the dollar would threaten this. China’s move away from manufacturing must happen, but the CCP wants to develop the economy in a controlled manner to prevent significant social shocks.

China is allowing its currency, the renminbi, to float, but it is controlling how much it will appreciate:

On the Monday after its statement, the PBOC let the currency appreciate by over 0.4%, generating quite a bit of excitement. At that rate the yuan would double in value in just 174 trading days. The next morning the central bank set its parity to reflect the previous day’s close. But as Tuesday wore on, it decided that “market supply and demand” needed a bit of a nudge. Heavy dollar-buying by the country’s big state banks, presumably at the PBOC’s behest, pushed the yuan down against the dollar, allowing the central bank to set a Wednesday-morning parity of 6.81 (see chart 1).

It’s a smart move on China’s part to try to placate the U.S., but I don’t think it’s going to matter. They aren’t going to let it appreciate as much as critics in the U.S. want (they would like our trade deficit with China wiped out).

The sun may be entering a period of low solar activity:

But for the past two years, the sunspots have mostly been missing. Their absence, the most prolonged for nearly a hundred years, has taken even seasoned sun watchers by surprise. “This is solar behaviour we haven’t seen in living memory,” says David Hathaway, a physicist at NASA’s Marshall Space Flight Center in Huntsville, Alabama.

The sun is under scrutiny as never before thanks to an armada of space telescopes. The results they beam back are portraying our nearest star, and its influence on Earth, in a new light. Sunspots and other clues indicate that the sun’s magnetic activity is diminishing, and that the sun may even be shrinking. Together the results hint that something profound is happening inside the sun. The big question is what?

The New York Times interviewed several North Koreans living in China, and the picture they show is disturbing:

Others were more skeptical of the government’s propaganda, but still cast war as an inevitability. “We always wait for the invasion,” said one former primary school teacher. “My son says he wishes the war would come because life is too hard, and we will probably die anyway from starvation.”

They struggle to even survive, are brainwashed, and are forced into a state of deep depression as a mode of everyday life, where each new day is another day of suffering. This is how people in North Korea live in 2010.