Is Shanghai Turning Pro or Just Building High? by Nathan Myhrvold | Hacker News Reader

Is Shanghai Turning Pro or Just Building High? by Nathan Myhrvold

freakonomics.blogs.nytimes.com

7 pointsrobg10 comments

I spent several months in china from last year to this year. I only stayed in Shanghai for a short while, because the city is built to impress, so it's easy to get blinded by the glamour.

But all the same, China is developing, and it's developing in a way that is dangerous to the west. I traveled to some villages where foreigners hardly ever go, and you see that the government is making a lot of money available to the people there to build. It's a form of ultra-capitalist socialism, where the government gives people money to develop, so that they themselves can develop.

But when I say it's dangerous to the west, what I mean is that it's developing, but the gap between the rich people and the poor people is still very clear, at least in the cities I was in. This means that a guy with a factory can afford to hire WAY more people, and has a lot more choice in his employees. There is no attempt to bring the workers then to the same level.

This means that building factories and industries is way cheaper than in the west, and they have a lot more staff for a lot less money. The living standard will not grow as fast, but the wealth in China will grow quickly.

And where's the danger you talked about?

Pretty sure Mark meant China's manufacturing/industrial sectors has the potential to put the Western ones out of business.

Which might well happen, but the Western world isn't going quietly - the West has already started strategically introducing McDonald's, Pepsi, and reality TV into China in an attempt to stem off growth.

> Pretty sure Mark meant China's manufacturing/industrial sectors has the potential to put the Western ones out of business.

So what? I could care less. For me it does not matter if I buy my wares from the guy down the street or from somebody across the globe. Why should I prefer one over the other? Why discriminate?

That's not the point. The point is that a structure is being created that has the potential to make the chinese industries so much more productive, that the same system would have to be adopted in the west.

And not just there, but all the other emerging economies that are trying to industrialize. They would all have to follow the same system. South East Asia, Africa, South America etc.

Now I'm not saying that the income of workers in China is not going to rise - I'm saying that at the moment, there is a big difference, and that gives them a competitive advantage. In china you typically have 3 or more people serving you at one table when you go to a restaurant. That would not be possible in the west because of the high labour cost - in China it's possible because of the wage difference between what is being earned in the restaurant and what the workers earn.

Controlling your economy and only buying local goods is not a good idea in my opinion, but when there are new manufacturing processes being used in emerging countries, then you have to be aware of this.

I don't believe in protectionism at all, so that's not the point I'm trying to convey.

Dude there's 1 billion people in China, you can't just say, ok lets make everybody middle class. Have you any idea what kind of demographic shift that would imply? Currently around 70% still live in rural areas (figure off top of my head), for good reason, because 1. they would literally not fit into the cities, and 2. you can't just abandon the rural industry.

I would argue that the government has to play a role in controlling population flow and income, its very very scary if you give the same resources to 1 billion people and let them lose, if it works great, but if it fails, well that will be an epic fail.

Already in this economic crisis there is rumors of potential civilian riots due to loss of jobs, we're talking about the maybe less then 50 million (5% of population) rural workers who may lose their jobs due to closing factories. Imagine if the government gave incentives for just 10% more of the rural population to move to the cities - this effect would be multiplied many times.

Just think of China as a new gizmo that turns stuff into other stuff (e.g. trade). As every new technology it will shift relative prices --- but that's something we have witnessed thousands of times before and the world did not came tumbling down.

(Of course if you care about the plight of the Chinese people than the black box simile is of no use. But it's adequate for an analysis of China's influence on the western economies.)

Presumably because the government is ensuring that Chinese entrepreneurs have access to capital and cheap labor. If businesses developed more organically with a balance between capital and labor, the Chinese middle class would grow and China would achieve wage parity with the West and would compete on similar terms. The arrangement he described would give the advantage to Chinese business owners and the Chinese government, at the expense of western businesses and the Chinese people.

Rising productivity of Chinese workers will raise their wages.

'Shanghai looked more like Manhattan on a Sunday'

He was obviously didn't know where to find the jackpot.

To experience the real culture of Shanghai you need to live life closer to the 'locals', not in some hotel in Pudong(east), all you'll find there is tall buildings. Hell I haven't even seen half of the places in those pictures.

If you took a moment to observe the locals that would be culture, the people in Shanghai are distinct to other parts of China, with traits such as quick wit and hard work, indeed they speak their own dialect. If he is trying to find old buildings as evidence of culture, Shanghai is not the best place, although there are quite a few around, including the famous tourist attraction Cheng Huang Miao:

http://outdoors.webshots.com/photo/1108224679049820088RZkVRy

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