China Law Blog

Having stuck up for the government on the chargers post, I suppose I ought to be consistent here...

I certainly think it's possible for a good government to enact pretty drastic environmental laws that are very beneficial in the long term but cause a lot of ructions in the short term - and thus might not get through the US system, while they would be driven through in China.

However, as I've also said, I'm not convinced at all that China has a good government. Is there anyone up there smart enough to really work out what China needs? They've avoided the corn>ethanol trap that the US is busy digging itself into, but the next big environmental goof miscalculation could very easily come from here. Plus, China has a liking for big showpiece projects to fix everything in one fell swoop - think Yangtze dam - and I'm not sure that's what produces the best effects environmentally.

And even if they get the right plan, how many people are they going to hurt doing it? I can't believe there'll be a return to anything as scary as the forced sterilizations and 9 month abortions like at the height of the population campaign - but you wouldn't put it past the Chinese government to mess up the lives of a lot of people (unnecessarily) to achieve their green goals.

The US system can hardly be presented as an ideal (and Britain's not much better), but it does at least include some protection against the worst excesses of a government with the bit between its teeth.

But for cars and cellphones - I'm happy for them to legislate as much as they want. Consumer frippery will never get my democratic juices going.

I'm with China Law Blog on this one. Governments the world over need to keep their hands off our cars and cell phones. The real problem with energy policy in the US (and other capitalist, pluralist democracies) isn't big oil and big auto. The real problem is the consumer and voter. The auto companies will give us an alternative to gas guzzling vehicles when we the consumers want such. Politicians will give us the necessary laws to halt global warming when we the majority demand real political action. In the meantime we don't need the "black hand" of government dictating to us what we should have - or next chewing gum and internet chat rooms might be banned. Give me the invisible hand of the market any day, no matter how imperfect. Go China Law Blog!

There's always the potential that even the authoritarian governments may not be able to overcome the market - ethanol production has already soared well past the official quotas as backyard distilleries go into overdrive (one of the reasons why they're now desperately trying to rein in the sector). Chances of companies actually paying attention to this ban on new grain-based ethanol plants?

Phil --

You have nicely summed up the problem with government intervention in this area. Who is to say it knows what it is doing? I am not saying the invisible hand is perfect, but I do think it works better than government.

Off The Record --

Exactly!

Duncan --

Good point.

While everyone here is comparing nat'l gov't to nat'l gov't, a big factor that is not being compared between western gov'ts and the big central chinese gov't is the independence of local authorities.

Some may not like the corn>ethanol move, but it is a stepping stone to a "holy grail" of sorts in converting plant waste to ethanol, "cellulose ethanol". Grass clippings, lumber industry scrap, raked leaves, the veggies your kids don't want, etc.

Bio-diesel is already making big headway in that area and without of federal help/interference and individual states are pushing through voter and gov't mandates on clean energy generation and that includes power grids buying back power generated by individual homes. That is why our system is better than China's, state and grassroots action doesn't wait for "big leaders" to make big decisions.

The invisible hand of the market in cases like these is basically not there at all unfortunately .. Over the past several years I haven't seen much change in our capitalist consumer behavior when it comes to the reduction of waste and energy. I think we should thank the CPC for such initiatives. Market driven innovation is too short term focused to address the problems at hand, especially here in China..

Ever since the collapse of the Soviet Union, people have been tripping over themselves to embrace the Washington Consensus and sing paens to market economics. Whether or not market forces or government intervention proves more effective will, I believe, ultimately be decided on a case by case basis depending on circumstances at the time and specific conditions.

Amusingly enough, a lot of the libertarian bonhomy reminds me of marxist economists in the commblock during the 80's. The "system" works, it just has yet to be put into full effect!

p.s. CLB, how did you manage to spade/lobotomize nanheyangrouchuan? The fur is really flying at the Peking Duck and I'm curious as to how you got him to drop the "bad dirty China" schtick that made him infamous, or at least hide it under a veneer of civility.

The hand of the market is invisible because it doesn't exist.

CLB and Off the Record, I'm sorry, but you have far too much faith in humanity. For the necessary changes to happen through market demand would require ordinary consumers to stop thinking only of their immediate pleasure and actually take their grandchildren's long term interests into account. All the evidence suggests that this just does not happen. Everybody knows about global warming, but precious few are willing to voluntarily make the necessary changes in their lifestyles.

I'm no fan of government intervention. We've all seen what governments do. But every now and then the market needs a good, firm kick up the arse.

An authoritarian government's power to effect change is huge. But if it makes a wrong decision, it pulls the whole country in a disastrous direction. The Great Leap Forward and Cultural Revolution notwithstanding, a carefully-studied approach can yield great benefits. The problem is an insufficiency of checks-and-balances to ensure that the wisest decision is made based on all information available. This concerns not only freedom to allow the marketplace to evaluate options for material products, but also ideas. If intellectual and artistic freedom are restrained by a government's desire to control thought, the public is dragged in the direction it is commanded to follow.

I might just add that despite what I said above, I still agree with chriswaugh. I don't trust the Chinese government to do the right thing, but I do trust democratic governments to give it a good stab.

Two very far reaching government environmental policies that I think are good: Sweden's plan to become oil-free over the next twenty years; and Brazil's switch to cane ethanol.

"I think we should thank the CPC for such initiatives. Market driven innovation is too short term focused to address the problems at hand, especially here in China.."

No, we shouldn't. China's other sloppy centrally planned ideas are killing its environmental initiatives.

I am a big E85 fan (85% ethanol) but not necessarily corn. Big oil has been resistant and in a very "uncapitalistic" way has resisted selling E85, but now BP and recently Conoco/ConAgra are getting into the game. So E85 won't just be a product of private/hippie gas stations.

If there was any need for a government push on industry, I'd rather see it done in the European way.

My suspicion (based on what I've seen in finance) is that energy policy works in China more or less the same way that it does in the United States, a vast bidding war between special interest groups. Bureaucratic decision making processes tend to be the same within the United States and in China.

For example, China keeps energy prices artificially low, and this has been a persistent battle between energy users (the state-owned steel companies want cheap energy) and energy producers (the state-owned oil companies want expensive oil). The net result is that energy is less subject to market forces than other sectors, and I'd argue that this is a very bad thing since the low price of energy encourages waste.

What seems to be the case in the ethanol plant decision was that the special interests in favor of closing the plants won over those that wanted to keep the plants open. You can usually figure out which side people are on by following the money. I don't see how this process is more (or less) rational than what happens in the United States.

Also just because Beijing says something, doesn't mean that anyone necessarily is listening.

The core competency of telecom/oil/automotive companies is lobbying. With few exceptions such as US, these industries were nationalized and through privatization, governments are still the majorities stake holders in most of these companies across the world. The issues here are not big governments v mom and pop shop private business. It's one hand of government v the other.

Does anyone seriously believe the massive Mandarins system of Chinese central government being able to act as one single mind and someone in that system can actually direct the system at will? It takes a charismatic maniac to wield that kind of power.

China's big gov't hand does not work well when it comes to telling the truth about harmful chemicals like diethylene glycol quantities in toothpaste:

MSDS for diethylene glycol:

"https://fscimage.fishersci.com/msds/07310.htm"

published evidence that even small amounts that Herc-off and his PRC masters say is not harmful are indeed potentially hazardous because of accumulation in fat:

"http://www.ncbi.nlm.nih.gov/sites/entrez?cmd=Retrieve&db=PubMed&list_uids=8135655&dopt=Abstract"

and here is the google search for more casual reading:

"http://www.google.com/search?hl=en&q=+Diethylene+Glycol+accumulation+in+body+fat&btnG=Google+Search"

nh --

Every blue moon we actually agree. This is that moon. I too think ideas/change/innovation are more likely to bubble up from below than be pushed down from above.

Roel --

Even if you are correct (and I do not think you are), what you are saying is that no matter what the people want, the government is smarter and ought to command. I disagree with you on that too.

Jing --

The system does work, just not perfectly.

I tried to find nh's war over at Peking Duck but could not. Can you give me a link. Though we disagree about 90% of the time (strangely enough, I just told nh on this post that I agreed with him), I have never had a problem with him/her. I actually appreciate his comments as they often serve as a good foil.

chriswaugh_bj --

You are exactly right, I do have a lot of faith in people in that I generally believe that each individual is usually the best person to decide what is best for him or herself. I am not a libertarian though so I do believe government has its place, but I also believe we should be reluctant to call it in, because it has an annoying tendency not to leave.

Todd L. Platek --

Very good point. I completely agree.

Phil --

I buy into your distinction for the most part. I certainly think the democractic government has more right to act, but I am not so sure it is any better in its decision making quality. I wonder if any studies have been done on this.

Joseph Wang --

I agree with you completely re both countries, which is why I see it naive to think that governments are some grand force for good.

David Li --

I concur.

nh --

More good reasons to avoid counterfeit toothpaste. Actually, more good reasons to check the country of origin of that which we ingest.

This newest revelation just goes to prove the extent of the evilness of China's export industry and foreign import/export agents who do beijing's bidding:

http://www.nytimes.com/2007/06/17/health/17poison.html?hp

nh --

That is an amazing article and I am going to do a quick post on it.

NH- Isn't "evilness of China's export industry" an undeserved generalization? Certainly in this case, the wrongdoing is egregious, and the apparent lack of a thorough investigation by the Chinese Gov't or, alternatively, the Gov't's refusal to disclose the results of an investigation in the event one has been/is being done, is frustrating to all of us. But can we say that this mentality of the exporter of the antifreeze component is so widespread throughout China as to constitute a predilection to evil in doing business? I think not. For my part, the Gov't's lack of dedication to investigation and/or its failure to communicate openly its findings presents a problem of at least equal proportion.

CLB, you're right, but people all too often act only for their immediate self-interest and don't think about long term consequences. That's why, in this case, I don't see anything wrong with the government's move. Now, if governments would restrict themselves to only this kind of gentle prod in the right direction and otherwise leave us alone, I think we'd all be happy...

CBL i'm not saying the government is smarter and ought to command. I'm saying that this CPC initiative doesn't harm a fundamental human right or restricts freedom but is a very efficient solution to the 100 million chargers being incinerated or dumped every year. A market driven solution would probably yield the same result (one standard) but it would take much longer to be in place.

The trouble is that people that think about "long term consequences" often get it wrong, and a lot of policies involve careful balancing between competing interests, and markets tend to be better at that than administrative solutions.

A market driven solution to the problem of incompatible chargers? I've got a charger with interchangable tips.

Todd L Platek:

No, it is not a generalization. Exporters, even foreign exporters in China don't give a hooey. They can't be prosecuted outside of China and won't be prosecuted inside of China (though that may change if Beijing is looking to make some more examples).

Basically, everyone can get away with pointing fingers at each other, calling up their lawyers and hiding behind some sort of technicality and the only guy who got punished was probably the least informed out of the whole lot.

NH- I cannot possibly agree. Plenty of exporters "give a hooey." You think they cannot be sued outside of China? I and many other lawyers represent a fair number of them who do get sued in the USA. It's no joke for those companies (or their insurers if they maintain cover) and they usually don't play dead if they intend to maintain a good name and continue shipping product to the USA. It wasn't that they didn't give a hooey, but for whatever reasons, consumers claimed injuries. I don't think that most of them run away from the claims, and besides compensation for the injured, the defendants generally use the experience to discover what in their factories went awry and then remedy the problem. Very often the problem is not systemic, but rather a "one-off" problem. With respect to factories running real scams, that's a policing problem that has criminal overtones and governments need to take more active stances. But I don't think you have sufficient grounds to be so cynical, because that's not the full picture of commercial reality.

Todd Platek --

I agree on both counts.

chriswaugh_bj --

Read the Making of a Bureaucratic Society and then let me know if you still feel okay about letting that camel into the tent.

Roel --

So where do we stop with the command economy?

Joseph Wang --

Yes!

nh --

I disagree re this being universal, but I do agree that the least guilty are the most vulnerable.

Todd Platek --

I have agree. I agree that it is not everyone and I agree that real companies care about the repurcussions. But, far too often, companies in China produce dangerous product and then shut down. We were called in a few years ago to help enforce a multi-million dollar judgment arising from a young child severly burned by a cigarette lighter. The company that did the deed basically became a ghost. This is not uncommon.

Dan, that is indeed a problem. But you and I face the same frustrating problem for clients in the US, where small outfits facilely close their doors and disappear to escape judgments. Building a case against their successor companies, or shareholders, is difficult.Unfortunately we all have files containing unenforceable judgments. Figuring out how to secure a judgment in advance, if possible, is key.